Critical Review: Sirius XM (SIRI) & Townsquare Media (TSQ)

Sirius XM (NASDAQ: SIRI) and Townsquare Media (NYSE:TSQ) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Analyst Recommendations

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This is a summary of recent ratings and price targets for Sirius XM and Townsquare Media, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sirius XM 2 5 10 0 2.47
Townsquare Media 1 1 4 0 2.50

Sirius XM currently has a consensus target price of $6.15, suggesting a potential downside of 0.22%. Townsquare Media has a consensus target price of $10.50, suggesting a potential upside of 32.91%. Given Townsquare Media’s stronger consensus rating and higher probable upside, analysts clearly believe Townsquare Media is more favorable than Sirius XM.

Dividends

Sirius XM pays an annual dividend of $0.04 per share and has a dividend yield of 0.6%. Townsquare Media pays an annual dividend of $0.30 per share and has a dividend yield of 3.8%. Sirius XM pays out 20.0% of its earnings in the form of a dividend. Townsquare Media pays out 40.5% 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.

Insider & Institutional Ownership

20.0% of Sirius XM shares are held by institutional investors. Comparatively, 49.3% of Townsquare Media shares are held by institutional investors. 1.1% of Sirius XM shares are held by insiders. Comparatively, 25.4% of Townsquare Media shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Sirius XM and Townsquare Media’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sirius XM 11.94% -79.79% 10.88%
Townsquare Media -2.13% 5.44% 1.99%

Valuation and Earnings

This table compares Sirius XM and Townsquare Media’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sirius XM $5.43 billion 5.10 $647.90 million $0.20 30.80
Townsquare Media $507.43 million 0.29 -$10.27 million $0.74 10.68

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

Risk and Volatility

Sirius XM has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, Townsquare Media has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

About Sirius XM

Sirius XM Radio Inc. broadcasts its music, sports, entertainment, comedy, talk, news, traffic and weather channels in the United States on a subscription fee basis through its two satellite radio systems. Subscribers can also receive certain of its music and other channels over the Internet, including through applications for mobile devices. As of December 31, 2011, it had 21,892,824 subscribers. Its subscribers include subscribers under its regular and discounted pricing plans; subscribers that have prepaid, including payments made or due from automakers for subscriptions included in the sale or lease price of a vehicle; radios activated for daily rental fleet programs, and subscribers to its Internet services who do not also have satellite radio subscriptions. In January 2013, Liberty Media Corporation announced it held 50.7% interest of the Company.

About Townsquare Media

Townsquare Media, Inc. operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets. It operates through two segments, Local Marketing Solutions and Entertainment. The Local Marketing Solutions segment provides broadcast and digital solutions to advertisers and businesses through its radio stations, Websites, radio stations' online streams, and mobile applications. It also offers digital marketing solutions, such as traditional and mobile enabled Website development and hosting services, e-commerce platforms, search engine and online directory optimization services, online reputation management, and social media management services under the Townsquare Interactive brand; and e-commerce products to consumers and advertisers through its proprietary deal and auction platform. As of December 31, 2017, this segment owned and operated 317 radio stations and approximately 325 Websites in 67 markets in the United States. The Entertainment segment creates, promotes, and produces live events, including festivals, fairs, concerts, expositions, and other experiential events. This segment also offer event production services to third parties; and digital advertising services, as well as owns a proprietary ticketing platform. In addition, it owns and operates a portfolio of 9 music and entertainment based national Websites. The company was formerly known as Regent Communications, Inc. and changed its name to Townsquare Media, Inc. in May 2010. Townsquare Media, Inc. was founded in 1996 and is headquartered in Greenwich, Connecticut.

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