Roku (NASDAQ:ROKU – Get Free Report) and Starz Entertainment (NASDAQ:STRZ – Get Free Report) are both communication services companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, dividends and valuation.
Volatility & Risk
Roku has a beta of 2.12, suggesting that its share price is 112% more volatile than the S&P 500. Comparatively, Starz Entertainment has a beta of 2.58, suggesting that its share price is 158% more volatile than the S&P 500.
Insider and Institutional Ownership
86.3% of Roku shares are held by institutional investors. 13.4% of Roku shares are held by insiders. Comparatively, 22.6% of Starz Entertainment shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for Roku and Starz Entertainment, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Roku | 0 | 17 | 8 | 1 | 2.38 |
| Starz Entertainment | 1 | 3 | 3 | 2 | 2.67 |
Roku currently has a consensus price target of $156.22, suggesting a potential downside of 2.15%. Starz Entertainment has a consensus price target of $33.71, suggesting a potential upside of 26.18%. Given Starz Entertainment’s stronger consensus rating and higher probable upside, analysts clearly believe Starz Entertainment is more favorable than Roku.
Profitability
This table compares Roku and Starz Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Roku | 9.34% | 18.65% | 11.41% |
| Starz Entertainment | -32.52% | -34.04% | -7.03% |
Valuation & Earnings
This table compares Roku and Starz Entertainment”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Roku | $4.74 billion | 5.00 | $88.36 million | $3.38 | 47.23 |
| Starz Entertainment | $963.40 million | 0.48 | -$115.80 million | ($24.36) | -1.10 |
Roku has higher revenue and earnings than Starz Entertainment. Starz Entertainment is trading at a lower price-to-earnings ratio than Roku, indicating that it is currently the more affordable of the two stocks.
Summary
Roku beats Starz Entertainment on 9 of the 14 factors compared between the two stocks.
About Roku
Roku, Inc. provides a streaming platform that connects viewers with television and other digital video content. Its products include streaming players and Roku-branded televisions, as well as the Roku operating system, which the company licenses to television manufacturers. Roku also operates a platform business that supports streaming services and advertisers. Its offerings include the Roku Channel, an ad-supported streaming service, and tools for distributing content and delivering advertising to viewers.
About Starz Entertainment
Starz Entertainment is a premium entertainment company that operates the STARZ subscription television network and streaming service. Its offerings include original series, feature films and other programming available through the STARZ app and participating television and streaming distributors. The company primarily serves audiences in the United States and Canada, distributing its programming through both traditional pay-TV channels and digital subscriptions. Its brand portfolio has included the STARZ and STARZ ENCORE networks.
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