Analyzing Gray Media (NYSE:GTN.A) and Saga Communications (NASDAQ:SGA)

Saga Communications (NASDAQ:SGA) and Gray Media (NYSE:GTN.A) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Dividends

Saga Communications pays an annual dividend of $1.00 per share and has a dividend yield of 10.4%. Gray Media pays an annual dividend of $0.32 per share and has a dividend yield of 3.8%. Saga Communications pays out -74.1% of its earnings in the form of a dividend. Gray Media pays out -20.9% 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. Saga Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Saga Communications and Gray Media”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saga Communications	$107.11 million	0.57	-$7.90 million	($1.35)	-7.10
Gray Media	$3.10 billion	0.28	-$85.00 million	($1.53)	-5.46

Saga Communications has higher earnings, but lower revenue than Gray Media. Saga Communications is trading at a lower price-to-earnings ratio than Gray Media, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Saga Communications and Gray Media’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saga Communications	-8.24%	3.88%	2.90%
Gray Media	-3.12%	-3.07%	-0.64%

Volatility and Risk

Saga Communications has a beta of -0.07, suggesting that its share price is 107% less volatile than the S&P 500. Comparatively, Gray Media has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Saga Communications and Gray Media, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saga Communications	1	2	0	0	1.67
Gray Media	0	0	0	0	0.00

Institutional and Insider Ownership

74.3% of Saga Communications shares are owned by institutional investors. Comparatively, 0.3% of Gray Media shares are owned by institutional investors. 22.4% of Saga Communications shares are owned by insiders. Comparatively, 13.3% of Gray Media shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Saga Communications beats Gray Media on 10 of the 14 factors compared between the two stocks.

About Saga Communications

Saga Communications, Inc., a media company, engages in acquiring, developing, and operating broadcast properties in the United States. The company's radio stations employ various programming formats, including classic hits, country, classic country, hot/soft/urban adult contemporary, oldies, classic rock, rock, and news/talk. It owns and operates FM and AM radio stations, and metro signals serving various markets. Saga Communications, Inc. was incorporated in 1986 and is headquartered in Grosse Pointe Farms, Michigan.

About Gray Media

Gray Television, Inc., a television broadcast company, owns and operates television stations and digital assets in the United States. As of February 28, 2019, it owned and operated television stations in 91 television markets broadcasting approximately 400 program streams, including approximately 150 channels affiliated with the CBS Network, the NBC Network, the ABC Network, and the FOX Network. The company also broadcasts secondary digital channels affiliated to ABC, CBS, and FOX, as well as channels affiliated with various other networks and program services, including CW Plus Network, MY Network, the MeTV Network, This TV Network, Antenna TV, Telemundo, Cozi, Heroes and Icons, and MOVIES! Network; and local news/weather channels in various markets. In addition, it is also involved in the video program production, marketing, and digital businesses including Raycom Sports, Tupelo-Raycom, and RTM Studios; and production of PowerNation programs and content. The company was formerly known as Gray Communications Systems, Inc. and changed its name to Gray Television, Inc. in August 2002. Gray Television, Inc. was founded in 1897 and is headquartered in Atlanta, Georgia.