Townsquare Media (NYSE: TSQ) and Salem Media Group (NASDAQ:SALM) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Earnings and Valuation

This table compares Townsquare Media and Salem Media Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Townsquare Media $514.36 million 0.36 $104.16 million $0.73 13.78
Salem Media Group $273.06 million 0.58 $46.09 million $0.28 21.79

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

Profitability

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

Net Margins Return on Equity Return on Assets
Townsquare Media 4.11% 6.85% 2.48%
Salem Media Group 2.75% 6.26% 2.28%

Insider & Institutional Ownership

49.1% of Townsquare Media shares are held by institutional investors. Comparatively, 30.5% of Salem Media Group shares are held by institutional investors. 25.7% of Townsquare Media shares are held by insiders. Comparatively, 60.0% of Salem Media Group shares are held by 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.

Volatility & Risk

Townsquare Media has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500. Comparatively, Salem Media Group has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Dividends

Salem Media Group pays an annual dividend of $0.26 per share and has a dividend yield of 4.3%. Townsquare Media does not pay a dividend. Salem Media Group pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations and price targets for Townsquare Media and Salem Media Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Townsquare Media 0 1 3 0 2.75
Salem Media Group 0 0 1 0 3.00

Townsquare Media presently has a consensus price target of $13.00, suggesting a potential upside of 29.22%. Given Townsquare Media’s higher possible upside, research analysts plainly believe Townsquare Media is more favorable than Salem Media Group.

Summary

Townsquare Media beats Salem Media Group on 11 of the 16 factors compared between the two stocks.

About Townsquare Media

Townsquare Media, Inc. is a media, entertainment and digital marketing solutions company principally focused on small and mid-sized markets across the United States. The Company operates through two segments: Local Advertising and Live Events. The Company’s Local Advertising segment offers broadcast, digital and mobile advertising within its local markets. The Company’s Live Events segment consists of a range of live events, which the Company creates, promotes and produces, including music concerts, multi-day music festivals, fairs, consumer expositions and trade shows, athletic events, lifestyle events and other forms of entertainment. The Company reports the remainder of its business in its Other Media and Entertainment category, which principally provides digital marketing solutions, e-commerce solutions and digital advertising services nationally. The Company’s assets include radio stations, live events, and digital, mobile, video and social media properties.

About Salem Media Group

Salem Media Group, Inc., formerly Salem Communications Corporation, is a multi-media company specializing in Christian and Conservative content, with media properties consisting of radio broadcasting, digital media, and book, magazine and newsletter publishing. The Company operates through three segments: Broadcast, Digital Media and Publishing. The Company’s broadcasting segment is engaged in the ownership and operation of radio stations in metropolitan markets. The Company’s radio stations carry national and local programming content, as well as national and local advertisers. The Company’s Digital Media segment focuses on Web-based platform designed for audiences interested in Christian and family-themed content and conservative news. The Company’s publishing segment consists of Regnery Publishing, Xulon Press and Salem Publishing. The Company owns and operates approximately 116 radio stations in over 40 markets.

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