Townsquare Media (NYSE:TSQ – Get Free Report) and Educational Development (NASDAQ:EDUC – Get Free Report) are both small-cap communication services companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.
Volatility and Risk
Townsquare Media has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500. Comparatively, Educational Development has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.
Profitability
This table compares Townsquare Media and Educational Development’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Townsquare Media | -11.82% | -5.59% | 0.51% |
| Educational Development | 9.75% | -18.23% | -12.73% |
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Townsquare Media | 1 | 1 | 1 | 0 | 2.00 |
| Educational Development | 1 | 0 | 0 | 0 | 1.00 |
Townsquare Media presently has a consensus target price of $10.00, indicating a potential upside of 69.49%. Given Townsquare Media’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Townsquare Media is more favorable than Educational Development.
Institutional & Insider Ownership
71.7% of Townsquare Media shares are held by institutional investors. Comparatively, 19.6% of Educational Development shares are held by institutional investors. 30.3% of Townsquare Media shares are held by company insiders. Comparatively, 11.9% of Educational Development shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Dividends
Townsquare Media pays an annual dividend of $0.80 per share and has a dividend yield of 13.6%. Educational Development pays an annual dividend of $0.10 per share and has a dividend yield of 7.4%. Townsquare Media pays out -27.8% of its earnings in the form of a dividend. Educational Development pays out 43.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Townsquare Media has raised its dividend for 3 consecutive years. Townsquare Media is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Townsquare Media and Educational Development”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Townsquare Media | $427.38 million | 0.25 | -$9.75 million | ($2.88) | -2.05 |
| Educational Development | $20.56 million | 0.56 | $2.33 million | $0.23 | 5.91 |
Educational Development has lower revenue, but higher earnings than Townsquare Media. Townsquare Media is trading at a lower price-to-earnings ratio than Educational Development, indicating that it is currently the more affordable of the two stocks.
Summary
Townsquare Media beats Educational Development on 12 of the 17 factors compared between the two stocks.
About Townsquare Media
Townsquare Media, Inc. operates as a digital media and marketing solutions company in small and medium-sized businesses. It operates through three segments: Subscription Digital Marketing Solutions, Digital Advertising, and Broadcast Advertising. The Subscription Digital Marketing Solutions segment offers website design, creation, and development, as well as hosting services; and search engine optimization, online directory optimization, e-commerce solutions, online reputation monitoring, social media management, appointment scheduling, payment and invoice, customer management, and email and SMS marketing services. The Digital Advertising segment provides digital advertising on its owned and operated, digital programmatic advertising, and data analytics and management platform. The Broadcast Advertising segment engages in the sale of advertising on local radio stations to local, regional, and national spot advertisers, as well as national network advertisers. It also owns and operates live events, including concerts, expositions, and other experiential events; and operates local media under the WYRK.com, WJON.com, and NJ101.5.com brands, as well as national music under the XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com brands. The company was formerly known as Regent Communications, Inc. and changed its name to Townsquare Media, Inc. in May 2010. Townsquare Media, Inc. is headquartered in Purchase, New York.
About Educational Development
Educational Development Corporation, a publishing company, operates as a publisher of educational children's books in the United States. It operates through two segments, PaperPie and Publishing. The company offers various books, including touchy-feely board books, activity books and flashcards, adventure and search books, art books, sticker books, and foreign language books, as well as internet-linked books comprising science and math titles, and chapter books and novels. It markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers, and its internal tele-sales group; and through a network of independent sales consultants through internet sales, direct sales, home shows, and book fairs. Educational Development Corporation was incorporated in 1965 and is headquartered in Tulsa, Oklahoma.
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