Viacom (NASDAQ: VIA) and Dolby Laboratories (NYSE:DLB) are both mid-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Dividends

Viacom pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Dolby Laboratories pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Viacom pays out 22.0% of its earnings in the form of a dividend. Dolby Laboratories pays out 28.6% 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. Viacom has increased its dividend for 2 consecutive years. Viacom is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Viacom has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Dolby Laboratories has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Valuation and Earnings

This table compares Viacom and Dolby Laboratories’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Viacom $13.17 billion 1.17 $2.92 billion $3.64 10.49
Dolby Laboratories $1.07 billion 5.56 $340.22 million $1.96 29.56

Viacom has higher revenue and earnings than Dolby Laboratories. Viacom is trading at a lower price-to-earnings ratio than Dolby Laboratories, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Viacom and Dolby Laboratories’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viacom 11.04% 30.89% 6.39%
Dolby Laboratories 19.02% 10.25% 8.78%

Institutional and Insider Ownership

2.3% of Viacom shares are held by institutional investors. Comparatively, 51.9% of Dolby Laboratories shares are held by institutional investors. 0.7% of Viacom shares are held by insiders. Comparatively, 43.8% of Dolby Laboratories shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Viacom and Dolby Laboratories, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viacom 1 5 4 0 2.30
Dolby Laboratories 0 2 3 0 2.60

Viacom currently has a consensus target price of $42.86, indicating a potential upside of 12.19%. Dolby Laboratories has a consensus target price of $56.88, indicating a potential downside of 1.84%. Given Viacom’s higher probable upside, equities research analysts clearly believe Viacom is more favorable than Dolby Laboratories.

Summary

Viacom beats Dolby Laboratories on 10 of the 17 factors compared between the two stocks.

Viacom Company Profile

Viacom Inc. offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

Dolby Laboratories Company Profile

Dolby Laboratories, Inc. designs and manufactures audio and imaging products for the cinema, television, broadcast and entertainment industries. Its products for cinema include Digital Cinema Servers and Cinema Audio Products, and broadcast and other include Dolby Conference Phone and Other Products. It offers services to support theatrical and television production for cinema exhibition, broadcast and home entertainment, including equipment training and maintenance, mixing room alignment and equalization, as well as audio, color and light image calibration. Its technologies include Advanced Audio Coding and High Efficiency Advanced Audio Coding, Dolby AC-4, Dolby Atmos, Dolby Digital, Dolby Digital Plus, Dolby TrueHD, Dolby Vision, Dolby Voice and High Efficiency Video Coding. It distributes its products in over 80 countries. Its technologies are incorporated in offerings in various end markets, such as the broadcast, Personal Computer, mobile, consumer electronics and other markets.

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