Head to Head Analysis: Lions Gate Entertainment Corp. Class A (LGF.A) versus World Wrestling Entertainment (WWE)

Lions Gate Entertainment Corp. Class A (NYSE: LGF.A) and World Wrestling Entertainment (NYSE:WWE) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Dividends

Lions Gate Entertainment Corp. Class A pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. World Wrestling Entertainment pays an annual dividend of $0.48 per share and has a dividend yield of 0.8%. Lions Gate Entertainment Corp. Class A pays out 29.3% of its earnings in the form of a dividend. World Wrestling Entertainment pays out 73.8% 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. Lions Gate Entertainment Corp. Class A is clearly the better dividend stock, given its higher yield and lower payout ratio.



Institutional & Insider Ownership

33.8% of Lions Gate Entertainment Corp. Class A shares are owned by institutional investors. Comparatively, 59.5% of World Wrestling Entertainment shares are owned by institutional investors. 26.5% of Lions Gate Entertainment Corp. Class A shares are owned by company insiders. Comparatively, 45.1% of World Wrestling Entertainment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Lions Gate Entertainment Corp. Class A and World Wrestling Entertainment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lions Gate Entertainment Corp. Class A $4.13 billion 1.29 $473.60 million $1.23 20.46
World Wrestling Entertainment $801.00 million 6.01 $32.64 million $0.65 96.00

Lions Gate Entertainment Corp. Class A has higher revenue and earnings than World Wrestling Entertainment. Lions Gate Entertainment Corp. Class A is trading at a lower price-to-earnings ratio than World Wrestling Entertainment, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Lions Gate Entertainment Corp. Class A has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, World Wrestling Entertainment has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Lions Gate Entertainment Corp. Class A and World Wrestling Entertainment, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lions Gate Entertainment Corp. Class A 0 5 12 0 2.71
World Wrestling Entertainment 0 4 7 0 2.64

Lions Gate Entertainment Corp. Class A currently has a consensus target price of $32.86, suggesting a potential upside of 30.54%. World Wrestling Entertainment has a consensus target price of $49.40, suggesting a potential downside of 20.83%. Given Lions Gate Entertainment Corp. Class A’s stronger consensus rating and higher possible upside, equities analysts clearly believe Lions Gate Entertainment Corp. Class A is more favorable than World Wrestling Entertainment.

Profitability

This table compares Lions Gate Entertainment Corp. Class A and World Wrestling Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lions Gate Entertainment Corp. Class A 11.47% 8.04% 2.71%
World Wrestling Entertainment 5.81% 23.28% 9.71%

Summary

Lions Gate Entertainment Corp. Class A beats World Wrestling Entertainment on 10 of the 16 factors compared between the two stocks.

About World Wrestling Entertainment

World Wrestling Entertainment, Inc., an integrated media and entertainment company, engages in the sports entertainment business in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company operates through Network, Television, Home Entertainment, Digital Media, Live Events, Licensing, Venue Merchandise, WWEShop, and WWE Studios segments. It operates WWE Network, a live streaming network that offers pay-per-view events, original programming, and video-on-demand library; and produces television programming, reality shows, and other programming, as well as produces content via home entertainment platforms, including DVD, Blu-Ray, subscription, and transactional on-demand outlets. The company also offers broadband and mobile content through its Websites and third party Websites; produces live events; and licenses various WWE themed products, such as video games, toys, apparel, books, and music. In addition, it designs, sources, markets, and distributes various WWE-branded products, such as T-shirts, belts, caps, and other novelty items; operates WWEShop, an e-commerce storefront; and WWE Studios that produces and distributes filmed entertainment content, such as movies for theatrical, home entertainment, and/or television release. World Wrestling Entertainment, Inc. was founded in 1980 and is headquartered in Stamford, Connecticut.

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