Graham Holdings (NYSE: GHC) and NutriSystem (NASDAQ:NTRI) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Volatility & Risk

Graham Holdings has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, NutriSystem has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Earnings and Valuation

This table compares Graham Holdings and NutriSystem’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Graham Holdings $2.48 billion 1.24 $168.59 million $22.20 25.16
NutriSystem $545.45 million 2.58 $35.46 million $1.83 25.60

Graham Holdings has higher revenue and earnings than NutriSystem. Graham Holdings is trading at a lower price-to-earnings ratio than NutriSystem, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Graham Holdings and NutriSystem, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graham Holdings 0 0 0 0 N/A
NutriSystem 0 1 7 0 2.88

NutriSystem has a consensus price target of $68.63, suggesting a potential upside of 46.48%. Given NutriSystem’s higher possible upside, analysts clearly believe NutriSystem is more favorable than Graham Holdings.

Profitability

This table compares Graham Holdings and NutriSystem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Graham Holdings 4.90% 5.50% 3.07%
NutriSystem 8.27% 49.69% 30.87%

Dividends

Graham Holdings pays an annual dividend of $5.08 per share and has a dividend yield of 0.9%. NutriSystem pays an annual dividend of $0.70 per share and has a dividend yield of 1.5%. Graham Holdings pays out 22.9% of its earnings in the form of a dividend. NutriSystem pays out 38.3% 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.

Institutional and Insider Ownership

69.3% of Graham Holdings shares are owned by institutional investors. Comparatively, 92.5% of NutriSystem shares are owned by institutional investors. 22.5% of Graham Holdings shares are owned by insiders. Comparatively, 2.4% of NutriSystem shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

NutriSystem beats Graham Holdings on 10 of the 15 factors compared between the two stocks.

About Graham Holdings

Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). The stations also broadcast digital channels focusing on classic television and lifestyle programming, in addition to operating mobile sites and mobile applications delivering breaking news, weather and community news.

About NutriSystem

Nutrisystem, Inc. is a provider of weight management products and services, including nutritionally balanced weight loss programs, multi-day kits available at retail locations and digital tools to support weight loss. The Company’s program customers purchase monthly food packages containing four-week meal plan consisting supply of breakfasts, lunches, dinners and snacks and flex meal plan recipes, which they supplement with fresh fruits, vegetables and dairy. Its customers order on an auto-delivery basis (Auto-Delivery), where means it sends a four-week meal plan on an ongoing basis until notified of a customer’s cancellation. The Company offers its pre-selected favorites food pack or personalized plans, where customers can hand pick their entire menu or customize plans to their dietary preference. As of December 31, 2016, its meal plans featured over 150 menu options at different price points, including frozen and ready-to-go entrees, desserts, snacks and shakes.

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