Reviewing Tencent Music Entertainment Group (NYSE:TME) & Reservoir Media (NASDAQ:RSVR)

Tencent Music Entertainment Group (NYSE:TME) and Reservoir Media (NASDAQ:RSVR) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and target prices for Tencent Music Entertainment Group and Reservoir Media, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent Music Entertainment Group	0	2	8	1	2.91
Reservoir Media	0	0	1	0	3.00

Tencent Music Entertainment Group currently has a consensus price target of $16.60, suggesting a potential downside of 14.70%. Reservoir Media has a consensus price target of $11.50, suggesting a potential upside of 45.75%. Given Reservoir Media’s stronger consensus rating and higher probable upside, analysts clearly believe Reservoir Media is more favorable than Tencent Music Entertainment Group.

Profitability

This table compares Tencent Music Entertainment Group and Reservoir Media’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	32.73%	10.95%	8.40%
Reservoir Media	4.88%	2.15%	0.96%

Earnings and Valuation

This table compares Tencent Music Entertainment Group and Reservoir Media”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tencent Music Entertainment Group	$3.89 billion	8.58	$924.18 million	$0.84	23.17
Reservoir Media	$158.71 million	3.25	$7.75 million	$0.11	71.73

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

Risk & Volatility

Tencent Music Entertainment Group has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, Reservoir Media has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Institutional & Insider Ownership

24.3% of Tencent Music Entertainment Group shares are held by institutional investors. Comparatively, 44.4% of Reservoir Media shares are held by institutional investors. 27.0% of Reservoir Media shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Tencent Music Entertainment Group beats Reservoir Media on 9 of the 15 factors compared between the two stocks.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

About Reservoir Media

Reservoir Media, Inc. operates as a music publishing company. It operates through two segments, Music Publishing and Recorded Music. The Music Publishing segment acquires interests in music catalogs, as well as signs songwriters. The Recorded Music segment engages in the acquisition of sound recording catalogs; discovery and development of recording artists; and marketing, distribution, sale, and licensing of the music catalogs. The company was founded in 2007 and is headquartered in New York, New York.