Entercom Communications (NYSE: ETM) and Cable One (NYSE:CABO) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Dividends

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Entercom Communications pays an annual dividend of $0.36 per share and has a dividend yield of 3.8%. Cable One pays an annual dividend of $7.00 per share and has a dividend yield of 1.0%. Entercom Communications pays out 14.0% of its earnings in the form of a dividend. Cable One pays out 17.0% 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. Cable One has increased its dividend for 2 consecutive years. Entercom Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Entercom Communications and Cable One, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Entercom Communications 0 0 1 0 3.00
Cable One 1 1 2 0 2.25

Cable One has a consensus price target of $790.33, suggesting a potential upside of 13.97%. Given Cable One’s higher possible upside, analysts plainly believe Cable One is more favorable than Entercom Communications.

Institutional & Insider Ownership

76.1% of Cable One shares are owned by institutional investors. 32.6% of Entercom Communications shares are owned by company insiders. Comparatively, 1.3% of Cable One shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Entercom Communications has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Cable One has a beta of 0.23, suggesting that its share price is 77% less volatile than the S&P 500.

Profitability

This table compares Entercom Communications and Cable One’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Entercom Communications 39.55% 0.08% 0.03%
Cable One 24.63% 23.21% 6.38%

Valuation & Earnings

This table compares Entercom Communications and Cable One’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Entercom Communications $592.88 million 2.17 $233.85 million $2.58 3.70
Cable One $960.03 million 4.14 $234.02 million $41.14 16.86

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

Summary

Cable One beats Entercom Communications on 11 of the 17 factors compared between the two stocks.

Entercom Communications Company Profile

Entercom Communications Corp. is a radio broadcasting company. The Company sells advertising time to local, regional and national advertisers and national network advertisers, purchasing spot commercials in varying lengths. It focuses on station-related digital platforms, which allow for audience interaction and participation, and integrated local digital marketing solutions and station events. Its stations are classified by their format, such as news, sports, talk, classic rock, urban, adult contemporary, alternative and country, among others. As of December 31, 2016, it had a portfolio of radio stations in 28 markets across the United States. It operates in various markets, which include Boston, Buffalo, Denver, Kansas City, Miami, Sacramento, San Francisco and Seattle. Its radio stations include KSWD Frequency Modulation (FM), KOSI FM, KYGO FM, KEPN AM, KKFN FM, KQKS FM, KRWZ Amplitude Modulation (AM), WSTR FM, WAXY AM/FM, WLYF FM, WMXJ FM, KBZT FM, KSON FM/KSOQ FM and KIFM FM.

Cable One Company Profile

Cable One, Inc. is a provider of data, video and voice services. The Company offers products, including Residential Video Services, Residential Data Services, Residential Voice Services, Business Services and Advertising. As of May 1, 2017, the Company provided data, video and voice services in 21 Western, Midwestern and Southern states. As of December 31, 2016, the Company provided these broadband services to residential and business customers in more than 35 cable systems covering over 400 cities and towns. The Company provides these broadband services to residential and business customers in approximately 40 cable systems covering over 400 cities and towns. The markets it serves are non-metropolitan, secondary markets, with its customers located in five states: Arizona, Idaho, Mississippi, Oklahoma and Texas. The Company offers a range of residential video services, generally ranging from a basic video service to digital service with access to hundreds of channels.

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