Analyzing Netflix (NASDAQ:NFLX) and Warner Bros. Discovery (NASDAQ:WBD)

Netflix (NASDAQ:NFLX) and Warner Bros. Discovery (NASDAQ:WBD) are both large-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, profitability, dividends and earnings.

Profitability

This table compares Netflix and Warner Bros. Discovery’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Netflix	23.07%	39.61%	17.90%
Warner Bros. Discovery	-28.16%	-30.56%	-10.27%

Analyst Ratings

This is a summary of current recommendations and price targets for Netflix and Warner Bros. Discovery, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Netflix	0	10	25	2	2.78
Warner Bros. Discovery	0	11	11	1	2.57

Netflix currently has a consensus target price of $1,172.73, suggesting a potential downside of 8.32%. Warner Bros. Discovery has a consensus target price of $12.17, suggesting a potential upside of 11.66%. Given Warner Bros. Discovery’s higher possible upside, analysts plainly believe Warner Bros. Discovery is more favorable than Netflix.

Valuation & Earnings

This table compares Netflix and Warner Bros. Discovery”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Netflix	$39.00 billion	13.96	$8.71 billion	$21.16	60.45
Warner Bros. Discovery	$39.32 billion	0.68	-$11.31 billion	($4.40)	-2.48

Netflix has higher earnings, but lower revenue than Warner Bros. Discovery. Warner Bros. Discovery is trading at a lower price-to-earnings ratio than Netflix, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Netflix has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, Warner Bros. Discovery has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500.

Insider and Institutional Ownership

80.9% of Netflix shares are held by institutional investors. Comparatively, 60.0% of Warner Bros. Discovery shares are held by institutional investors. 1.4% of Netflix shares are held by company insiders. Comparatively, 1.8% of Warner Bros. Discovery shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Netflix beats Warner Bros. Discovery on 12 of the 15 factors compared between the two stocks.

About Netflix

Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. It has operations in approximately 190 countries. The company was incorporated in 1997 and is headquartered in Los Gatos, California.

About Warner Bros. Discovery

Warner Bros. Discovery, Inc. operates as a media and entertainment company worldwide. It operates through three segments: Studios, Network, and DTC. The Studios segment produces and releases feature films for initial exhibition in theaters; produces and licenses television programs to its networks and third parties and direct-to-consumer services; distributes films and television programs to various third parties and internal television; and offers streaming services and distribution through the home entertainment market, themed experience licensing, and interactive gaming. The Network segment comprises domestic and international television networks. The DTC segment offers premium pay-tv and streaming services. In addition, the company offers portfolio of content, brands, and franchises across television, film, streaming, and gaming under the Warner Bros. Motion Picture Group, Warner Bros. Television Group, DC, HBO, HBO Max, Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT Sports, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings brands. Further, it provides content through distribution platforms, including linear network, free-to-air, and broadcast television; authenticated GO applications, digital distribution arrangements, content licensing arrangements, and direct-to-consumer subscription products. Warner Bros. Discovery, Inc. was incorporated in 2008 and is headquartered in New York, New York.