DTS (NASDAQ: DTSI) and Viacom (NASDAQ:VIAB) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitabiliy, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Dividends

DTS pays an annual dividend of $0.08 per share and has a dividend yield of 0.2%. Viacom pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. DTS pays out -19.0% of its earnings in the form of a dividend. Viacom pays out 26.4% 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for DTS and Viacom, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DTS 0 5 0 0 2.00
Viacom 5 16 9 0 2.13

DTS currently has a consensus price target of $37.88, suggesting a potential downside of 10.80%. Viacom has a consensus price target of $43.32, suggesting a potential upside of 22.27%. Given Viacom’s stronger consensus rating and higher probable upside, analysts clearly believe Viacom is more favorable than DTS.

Profitability

This table compares DTS and Viacom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DTS 1.17% 1.04% 0.59%
Viacom 9.32% 32.00% 6.20%

Institutional & Insider Ownership

98.1% of DTS shares are held by institutional investors. Comparatively, 76.9% of Viacom shares are held by institutional investors. 11.3% of DTS shares are held by insiders. Comparatively, 0.4% of Viacom shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares DTS and Viacom’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DTS N/A N/A N/A ($0.42) -101.09
Viacom $12.91 billion 1.10 $2.89 billion $3.03 11.69

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

Risk & Volatility

DTS has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Viacom has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500.

Summary

Viacom beats DTS on 10 of the 13 factors compared between the two stocks.

About DTS

DTS, Inc. is an audio technology solutions provider for high-definition entertainment experiences. The Company’s audio solutions are designed to enable recording, delivery and playback of high-definition audio, and are included by licensee customers around the world into a range of consumer electronics devices, including televisions, personal computers (PCs), smartphones, tablets, digital media players (DMPs), set-top-boxes, soundbars, wireless speakers, video game consoles, Blu-ray Disc players, automotive audio systems, audio/video receivers (AVRs), digital versatile disc (DVD)-based products and home theater systems. In the wireless speakers market, the Company maintains a Play-Fi Certified original design manufacturer (ODM) Program. The Company’s market base includes Blu-ray, Home audio video (AV) and Automotive. The Blu-ray market includes standalone players, gaming devices and disc drives included in PCs.

About Viacom

Viacom Inc. offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

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