Critical Analysis: TEGNA (NYSE:TGNA) versus Townsquare Media (NYSE:TSQ)

TEGNA (NYSE:TGNA) and Townsquare Media (NYSE:TSQ) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for TEGNA and Townsquare Media, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TEGNA	1	3	2	0	2.17
Townsquare Media	0	1	2	0	2.67

TEGNA currently has a consensus price target of $19.75, indicating a potential downside of 0.23%. Townsquare Media has a consensus price target of $17.00, indicating a potential upside of 174.11%. Given Townsquare Media’s stronger consensus rating and higher probable upside, analysts clearly believe Townsquare Media is more favorable than TEGNA.

Volatility & Risk

TEGNA has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, Townsquare Media has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Valuation & Earnings

This table compares TEGNA and Townsquare Media”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TEGNA	$3.03 billion	1.05	$599.82 million	$2.78	7.12
Townsquare Media	$447.25 million	0.23	-$10.93 million	$2.02	3.07

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TEGNA	14.99%	16.20%	6.68%
Townsquare Media	7.93%	-56.87%	3.43%

Dividends

TEGNA pays an annual dividend of $0.50 per share and has a dividend yield of 2.5%. Townsquare Media pays an annual dividend of $0.80 per share and has a dividend yield of 12.9%. TEGNA pays out 18.0% of its earnings in the form of a dividend. Townsquare Media pays out 39.6% 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. TEGNA has raised its dividend for 4 consecutive years and Townsquare Media has raised its dividend for 3 consecutive years.

Insider & Institutional Ownership

92.2% of TEGNA shares are owned by institutional investors. Comparatively, 71.7% of Townsquare Media shares are owned by institutional investors. 0.5% of TEGNA shares are owned by insiders. Comparatively, 30.5% of Townsquare Media shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

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

About TEGNA

TEGNA Inc., a media company, provides broadcast advertising and marketing products and services for businesses. The company operates 47 television stations in 39 markets of the United States that produce local programming, such as news, sports, and entertainment. It offers local and national non-political advertising; political advertising; production of programming from third parties; production of advertising materials; and digital marketing services, as well as advertising services on the stations' Websites, tablets, and mobile products. The company also sells commercial advertising spots of its television stations. In addition, it operates Premion, an over the top local advertising network; Hatch, a centralized 360-degree marketing services agency; and radio broadcast stations. The company was formerly known as Gannett Co., Inc. and changed its name to TEGNA Inc. in June 2015. TEGNA Inc. was founded in 1906 and is headquartered in McLean, Virginia.

About Townsquare Media

Townsquare Media, Inc. operates as a digital media and marketing solutions company in small and medium-sized businesses. It operates through three segments: Subscription Digital Marketing Solutions, Digital Advertising, and Broadcast Advertising. The Subscription Digital Marketing Solutions segment offers website design, creation, and development, as well as hosting services; and search engine optimization, online directory optimization, e-commerce solutions, online reputation monitoring, social media management, appointment scheduling, payment and invoice, customer management, and email and SMS marketing services. The Digital Advertising segment provides digital advertising on its owned and operated, digital programmatic advertising, and data analytics and management platform. The Broadcast Advertising segment engages in the sale of advertising on local radio stations to local, regional, and national spot advertisers, as well as national network advertisers. It also owns and operates live events, including concerts, expositions, and other experiential events; and operates local media under the WYRK.com, WJON.com, and NJ101.5.com brands, as well as national music under the XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com brands. The company was formerly known as Regent Communications, Inc. and changed its name to Townsquare Media, Inc. in May 2010. Townsquare Media, Inc. is headquartered in Purchase, New York.