Netflix (NASDAQ: NFLX) and Salem Media Group (NASDAQ:SALM) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Profitability

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This table compares Netflix and Salem Media Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Netflix 4.78% 17.20% 3.34%
Salem Media Group 9.34% 2.54% 0.96%

Dividends

Salem Media Group pays an annual dividend of $0.26 per share and has a dividend yield of 7.1%. Netflix does not pay a dividend. Salem Media Group pays out 27.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings for Netflix and Salem Media Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Netflix 3 16 30 0 2.55
Salem Media Group 0 0 1 0 3.00

Netflix presently has a consensus target price of $249.74, suggesting a potential downside of 21.09%. Given Netflix’s higher probable upside, equities research analysts clearly believe Netflix is more favorable than Salem Media Group.

Risk & Volatility

Netflix has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Salem Media Group has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Institutional & Insider Ownership

81.6% of Netflix shares are held by institutional investors. Comparatively, 30.5% of Salem Media Group shares are held by institutional investors. 4.9% of Netflix shares are held by insiders. Comparatively, 60.0% of Salem Media Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Netflix and Salem Media Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Netflix $11.69 billion 11.75 $558.92 million $1.25 253.18
Salem Media Group $263.74 million 0.36 $24.64 million $0.94 3.88

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

Summary

Netflix beats Salem Media Group on 11 of the 16 factors compared between the two stocks.

Netflix Company Profile

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

Salem Media Group Company Profile

Salem Media Group, Inc., formerly Salem Communications Corporation, is a multi-media company specializing in Christian and Conservative content, with media properties consisting of radio broadcasting, digital media, and book, magazine and newsletter publishing. The Company operates through three segments: Broadcast, Digital Media and Publishing. The Company’s broadcasting segment is engaged in the ownership and operation of radio stations in metropolitan markets. The Company’s radio stations carry national and local programming content, as well as national and local advertisers. The Company’s Digital Media segment focuses on Web-based platform designed for audiences interested in Christian and family-themed content and conservative news. The Company’s publishing segment consists of Regnery Publishing, Xulon Press and Salem Publishing. The Company owns and operates approximately 116 radio stations in over 40 markets.

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