Which Entertainment Stock is a Better Buy?


With the growing penetration of blockchain-based digital assets and streaming services, the entertainment industry is about to grow. Therefore, Comcast Corporation (CMCSA) and Warner Bros. Discovery (WBD) should benefit. But which of these two stocks is a better buy now? Read on to learn more about our vision.



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Comcast Corporation (CMCSA) in Philadelphia, Pennsylvania, operates as a worldwide media and technology company. It works through cable communications; Media; Studies; Theme parks; and sky segments. In comparison, Warner Bros. Discovery, Inc. (WBD) in New York City is a media company that offers content to different distribution platforms in approximately 50 languages ​​worldwide. It also produces, develops and distributes feature films, television, games and other content in various physical and digital formats.

Despite the recent peak of COVID-19 and inflation issues, entertainment providers are in high demand due to the growing trend of watching videos and other content online. In addition, advances in Web3 and the growing penetration of the Internet around the world are expected to drive the growth of the entertainment industry.

According to a report by Market Reports World, the global entertainment and media market is expected to grow at a CAGR of 5.9% between 2022 and 2028. Therefore, both CMCSA and WBD should benefit.

But which of these two stocks is a better buy now? Let’s find out.

Latest news

On May 10, 2022, CMCSA announced that its Board of Directors had declared a quarterly dividend of $ 0.27 per share on its common shares. The quarterly dividend will be paid on July 27, 2022 to registered shareholders from the close of business on July 6, 2022.

On May 10, 2022, WBD and Roku, Inc. (COURSE) announced that Discovery +, the ultimate real-life, non-fiction subscription streaming service, has been launched as a Premium Subscription to The Roku Channel. Gabriel Sauerhoff, vice president of digital distribution and business partnerships, WBD, said: “We are pleased to deepen our relationship with Roku, a valuable partner, and expand access to Discovery + on the Roku platform by launching The Roku Channel.”

Recent financial results

CMCSA’s revenue increased 14% year-over-year to $ 31,010 million during the first quarter of fiscal, ended March 31, 2022. The company’s adjusted net income grew 10.5% year-on-year to $ 3.9 billion dollars. In addition, its adjusted BPA stood at $ 0.86, up 13.2% year-on-year.

WBD’s revenue increased 13% year-over-year to $ 3.16 billion during the first quarter of fiscal, ended March 31, 2022. The company’s net income grew 225.7% year-on-year to $ 456 million . In addition, its EPS reached $ 0.69, up 228.6% year-on-year.

Past and expected financial performance

CMCSA’s total revenue and assets have grown at a CAGR of 6.8% and 2.3%, respectively, over the past three years. Analysts expect CMCSA revenues to increase 5.5% in 2022 and 1.7% in 2023. The company’s EPA is expected to grow 9.5% for the quarter ending June 30 2022 and 11.8% in 2022. EPS is expected to grow at a rate of 13.5% annually over the next five years.

In comparison, WBD’s total revenue and assets have grown at a CAGR of 4.7% and 1.4%, respectively, over the past three years. The company’s revenue is expected to increase by 276.4% in fiscal year 2022 and by 10.5% in fiscal year 2023. However, its EPS is expected to decline by 101.1% for in the quarter ending June 30, 2022 and 71.8% in fiscal year 2022. WBD’s EPA is expected to increase at a rate of 7.4% annually over the next five years.

Profitability

CMCSA’s subsequent 12-month revenue is 9.57 times what WBD generates. CMCSA is also more profitable, with gross profit margins and net profit of 66.64% and 11.96%, respectively, compared to 61.12% and 10.53% of WBD.

In addition, the ROE of 14.67%, 4.83% and 6.68% of CMCSA, ROAand ROTC are higher than 11.33%, 3.90% and 4.73% of WBD.

Evaluation

For non-GAAP forward P / E, WBD is currently trading at 14.40x, which is 29.7% higher than CMCSA’s 11.10x. However, the 7.39x CMCSA EV / EBITDA is 52.1% higher than the WBD’s 4.86x.

POWR ratings

CMCSA has an overall rating of A, which equates to a strong purchase on our property POWR ratings system. In contrast, WBD has an overall rating of C, which translates to neutral. POWR scores are calculated taking into account 118 different factors, with each factor weighted to an optimal degree.

CMCSA has a B rating for stability, which is synchronized with its beta of 0.93. In comparison, WBD has a degree C of stability, which is consistent with its 1.13 beta.

Of the nine actions of the Entertainment: TV and Internet providers industry, CMCSA ranks first. However, WBD ranks 4th out of 21 shares in the Entertainment – Media Producers industry.

Beyond what I said earlier, we have also valued the actions for Growth, Value, Quality, Momentum and Feeling. Click here to view all CMCSA ratings. Also, get all WBD ratings here.

The winner

As the entertainment industry is expected to grow exponentially due to the growing adoption of smart homes and advances in television technology, both CMCSA and WBD should benefit. However, it is better to bet on CMCSA now because of its higher profit margin and better growth prospects.

Our research shows that the chances of success increase when you invest in stocks with an overall buy or strong buy score. Check out all the other top rated stocks in the Entertainment industry – Internet and TV Providers here. Too, click here to access all the top rated stocks in the Entertainment industry – Media Producers.


Shares of CMCSA traded at $ 41.32 per share on Friday afternoon, down $ 0.07 (-0.17%). For the year, CMCSA has decreased by -17.03%, compared to an increase of -15.68% in the S&P 500 benchmark index over the same period.


About the author: Nimesh Jaiswal

Nimesh Jaiswal’s His keen interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in boosting stock prices is the key approach he takes while advising investors on his articles.

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