Warner Music Group (NASDAQ:WMG – Get Free Report) and Gaia (NASDAQ:GAIA – Get Free Report) are both communication services companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.
Institutional and Insider Ownership
96.9% of Warner Music Group shares are owned by institutional investors. Comparatively, 40.5% of Gaia shares are owned by institutional investors. 0.1% of Warner Music Group shares are owned by insiders. Comparatively, 26.0% of Gaia shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent ratings and price targets for Warner Music Group and Gaia, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Warner Music Group | 0 | 4 | 13 | 0 | 2.76 |
| Gaia | 1 | 0 | 0 | 0 | 1.00 |
Volatility and Risk
Warner Music Group has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, Gaia has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.
Earnings and Valuation
This table compares Warner Music Group and Gaia”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Warner Music Group | $7.30 billion | 2.03 | $365.00 million | $1.26 | 22.49 |
| Gaia | $98.95 million | 0.42 | -$4.49 million | ($0.24) | -6.81 |
Warner Music Group has higher revenue and earnings than Gaia. Gaia is trading at a lower price-to-earnings ratio than Warner Music Group, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Warner Music Group and Gaia’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Warner Music Group | 9.20% | 85.50% | 7.00% |
| Gaia | -6.08% | -5.82% | -3.85% |
Summary
Warner Music Group beats Gaia on 13 of the 14 factors compared between the two stocks.
About Warner Music Group
Warner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. It operates through Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as related marketing, promotion, distribution, sale, and licensing of music created by such recording artists; markets its music catalog through compilations and reissuances of previously released music and video titles, as well as previously unreleased materials; and conducts its operation primarily through a collection of record labels, such as Warner Records and Atlantic Records, as well as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin’ Records, Warner Classics, and Warner Music Nashville. This segment markets, distributes, and sells music and video products to retailers and wholesale distributors; independent labels to retail and wholesale distributors; and various distribution centers and ventures, as well as retail outlets, online physical retailers, streaming services, and download services. The Music Publishing segment owns and acquires rights to approximately one million musical compositions comprising pop hits, American standards, folk songs, and motion picture and theatrical compositions. Its catalog includes approximately 150,000 songwriters and composers; and various genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative, and gospel. This segment also administers the music and soundtracks of various third-party television and film producers and studios. The company was founded in 1929 and is headquartered in New York, New York.
About Gaia
Gaia, Inc. operates a digital video subscription service and online community for underserved member base in the United States, Canada, Australia, and internationally. The company has a digital content library with various titles in Spanish, German, and French languages available to its subscribers on internet connected devices. Its network includes Yoga channel, which provides access to streaming yoga, Eastern arts, and other movement based classes; Transformation channel that offers content in the areas of spiritual growth, personal development, and expanded consciousness; Alternative Healing channel, which features content focused on food and nutrition, holistic healing, alternative and integrative medicines, and longevity; and Seeking Truth channel that provides access to interviews and presentations in the ancient wisdom and metaphysics genre. The company was formerly known as Gaiam, Inc. and changed its name to Gaia, Inc. in July 2016. Gaia, Inc. was incorporated in 1988 and is headquartered in Louisville, Colorado.
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