Critical Review: TEGNA (NYSE:TGNA) vs. Sirius XM (NASDAQ:SIRI)

Sirius XM (NASDAQ:SIRI) and TEGNA (NYSE:TGNA) are both mid-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Dividends

Sirius XM pays an annual dividend of $1.08 per share and has a dividend yield of 5.0%. TEGNA pays an annual dividend of $0.50 per share and has a dividend yield of 2.5%. Sirius XM pays out 38.2% of its earnings in the form of a dividend. TEGNA pays out 23.6% 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. Sirius XM has increased its dividend for 7 consecutive years and TEGNA has increased its dividend for 4 consecutive years. Sirius XM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sirius XM	11.61%	8.79%	3.62%
TEGNA	11.97%	12.50%	5.33%

Insider and Institutional Ownership

10.7% of Sirius XM shares are owned by institutional investors. Comparatively, 92.2% of TEGNA shares are owned by institutional investors. 0.8% of Sirius XM shares are owned by company insiders. Comparatively, 0.5% of TEGNA shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Sirius XM and TEGNA”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sirius XM	$8.70 billion	0.83	-$1.67 billion	$2.83	7.61
TEGNA	$3.10 billion	1.02	$599.82 million	$2.12	9.25

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

Volatility and Risk

Sirius XM has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, TEGNA has a beta of 0.12, suggesting that its share price is 88% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Sirius XM and TEGNA, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sirius XM	3	3	3	1	2.20
TEGNA	1	4	1	0	2.00

Sirius XM presently has a consensus target price of $24.29, indicating a potential upside of 12.75%. TEGNA has a consensus target price of $19.75, indicating a potential upside of 0.69%. Given Sirius XM’s stronger consensus rating and higher probable upside, analysts plainly believe Sirius XM is more favorable than TEGNA.

Summary

Sirius XM beats TEGNA on 10 of the 18 factors compared between the two stocks.

About Sirius XM

Sirius XM Holdings Inc. operates as an audio entertainment company in North America. It operates in two segments, Sirius XM, and Pandora and Off-platform. The company’s Sirius XM segment provides music, sports, entertainment, comedy, talk, news, traffic and weather channels, and other content, as well as podcast and infotainment services on subscription fee basis; and live, curated, and exclusive and on demand programming services through satellite radio systems and streamed through applications for mobile and home devices, and other consumer electronic equipment. This segment also distributes satellite radios through automakers and retailers, as well as its website; podcasts, including true crime, news, politics, music, comedy, sports, and entertainment; and offers location-based services through two-way wireless connectivity, including safety, security, convenience, maintenance and data, remote vehicles diagnostic, and stolen or parked vehicle locator services. In addition, this segment provides music channels on the DISH Network satellite television service as a programming package; Travel Link, a suite of data services that include graphical weather, fuel prices, sports schedule and scores, and movie listings; graphic information related to road closings, traffic flow, and incident data for consumers with in-vehicle navigation systems; real-time weather services in vehicles, boats, and planes; and music programming and commercial-free music services for office, restaurants, and other business. Its Pandora and Off-platform segment operates music, comedy, and podcast streaming platform, which offers personalized experience for listener through computers, tablets, mobile devices, vehicle speakers, and connected devices; and provides advertising services. The company was incorporated in 2013 and is headquartered in New York.

About TEGNA

TEGNA Inc., a media company, provides broadcast advertising and marketing products and services for businesses. The company operates 47 television stations in 39 markets of the United States that produce local programming, such as news, sports, and entertainment. It offers local and national non-political advertising; political advertising; production of programming from third parties; production of advertising materials; and digital marketing services, as well as advertising services on the stations' Websites, tablets, and mobile products. The company also sells commercial advertising spots of its television stations. In addition, it operates Premion, an over the top local advertising network; Hatch, a centralized 360-degree marketing services agency; and radio broadcast stations. The company was formerly known as Gannett Co., Inc. and changed its name to TEGNA Inc. in June 2015. TEGNA Inc. was founded in 1906 and is headquartered in McLean, Virginia.