Discovery Communications (NASDAQ: DISCA) and AMC Networks (NASDAQ:AMCX) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their profitabiliy, institutional ownership, valuation, risk, analyst recommendations, earnings and dividends.

Profitability

This table compares Discovery Communications and AMC Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Discovery Communications 17.50% 23.67% 7.89%
AMC Networks 10.59% 502.40% 8.63%

Risk & Volatility

Discovery Communications has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, AMC Networks has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Discovery Communications and AMC Networks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Discovery Communications 3 13 1 0 1.88
AMC Networks 1 7 7 0 2.40

Discovery Communications presently has a consensus target price of $28.86, suggesting a potential upside of 10.06%. AMC Networks has a consensus target price of $60.45, suggesting a potential upside of 6.57%. Given Discovery Communications’ higher possible upside, equities research analysts plainly believe Discovery Communications is more favorable than AMC Networks.

Earnings & Valuation

This table compares Discovery Communications and AMC Networks’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Discovery Communications $6.55 billion 1.77 $2.47 billion $1.91 13.73
AMC Networks $2.77 billion 1.36 $845.29 million $4.14 13.70

Discovery Communications has higher revenue and earnings than AMC Networks. AMC Networks is trading at a lower price-to-earnings ratio than Discovery Communications, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

44.2% of Discovery Communications shares are held by institutional investors. Comparatively, 82.1% of AMC Networks shares are held by institutional investors. 5.8% of Discovery Communications shares are held by company insiders. Comparatively, 17.7% of AMC Networks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

About Discovery Communications

Discovery Communications, Inc. (Discovery) is a global media company. The Company provides content across multiple distribution platforms, including pay-television (pay-TV), free-to-air (FTA) and broadcast television, Websites, digital distribution arrangements and content licensing agreements. Its segments include U.S. Networks, which consists principally of domestic television networks and digital content services; International Networks, consisting primarily of international television networks and digital content services, and Education and Other, which consists principally of curriculum-based product and service offerings, and production studios. The Company’s portfolio of networks includes television brands, such as Discovery Channel, Animal Planet, ID, Velocity (known as Turbo outside of the United States) and Eurosport. It is also engaged in extending content distribution across various platforms, including brand-aligned Websites, Web-native networks and online streaming.

About AMC Networks

AMC Networks Inc. is a holding company, which conducts all of its operations through its subsidiaries. The Company owns and operates entertainment businesses and assets. It operates through two segments: National Networks, and International and Other. National Networks includes activities of its programming businesses, which include its programming networks distributed in the United States and Canada. The International and Other segment includes AMC Networks International (AMCNI), the Company’s international programming businesses consisting of a portfolio of channels in Europe, Latin America, the Middle East and parts of Asia and Africa; IFC Films, the Company’s independent film distribution business; AMCNI- DMC, the broadcast solutions unit of certain networks of AMCNI and third-party networks, and various developing online content distribution initiatives. National Networks’ programming networks include AMC, WE tv, BBC AMERICA and SundanceTV.

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