NutriSystem (NASDAQ: NTRI) and Graham (NYSE:GHC) are both non-cyclical consumer goods & services companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.

Risk & Volatility

NutriSystem has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, Graham has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Insider & Institutional Ownership

92.5% of NutriSystem shares are held by institutional investors. Comparatively, 69.0% of Graham shares are held by institutional investors. 2.4% of NutriSystem shares are held by company insiders. Comparatively, 22.5% of Graham shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares NutriSystem and Graham’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NutriSystem $545.45 million 2.71 $35.46 million $1.85 26.62
Graham $2.48 billion 1.27 $168.59 million $22.20 25.74

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for NutriSystem and Graham, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NutriSystem 0 1 7 0 2.88
Graham 0 0 0 0 N/A

NutriSystem currently has a consensus target price of $68.63, indicating a potential upside of 39.34%. Given NutriSystem’s higher possible upside, equities analysts clearly believe NutriSystem is more favorable than Graham.

Profitability

This table compares NutriSystem and Graham’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NutriSystem 8.27% 49.69% 30.87%
Graham 4.90% 5.50% 3.07%

Dividends

NutriSystem pays an annual dividend of $0.70 per share and has a dividend yield of 1.4%. Graham pays an annual dividend of $5.08 per share and has a dividend yield of 0.9%. NutriSystem pays out 37.8% of its earnings in the form of a dividend. Graham pays out 22.9% 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.

Summary

NutriSystem beats Graham on 10 of the 15 factors compared between the two stocks.

About NutriSystem

Nutrisystem, Inc. is a provider of weight management products and services, including nutritionally balanced weight loss programs, multi-day kits available at retail locations and digital tools to support weight loss. The Company’s program customers purchase monthly food packages containing four-week meal plan consisting supply of breakfasts, lunches, dinners and snacks and flex meal plan recipes, which they supplement with fresh fruits, vegetables and dairy. Its customers order on an auto-delivery basis (Auto-Delivery), where means it sends a four-week meal plan on an ongoing basis until notified of a customer’s cancellation. The Company offers its pre-selected favorites food pack or personalized plans, where customers can hand pick their entire menu or customize plans to their dietary preference. As of December 31, 2016, its meal plans featured over 150 menu options at different price points, including frozen and ready-to-go entrees, desserts, snacks and shakes.

About Graham

Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). The stations also broadcast digital channels focusing on classic television and lifestyle programming, in addition to operating mobile sites and mobile applications delivering breaking news, weather and community news.

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