Contrasting Gaia (NASDAQ:GAIA) & Warner Music Group (NASDAQ:WMG)

Gaia (NASDAQ:GAIA) and Warner Music Group (NASDAQ:WMG) are both communication services companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.

Analyst Recommendations

This is a summary of recent ratings for Gaia and Warner Music Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gaia	1	0	0	0	1.00
Warner Music Group	0	4	13	0	2.76

Warner Music Group has a consensus target price of $38.77, indicating a potential upside of 38.78%. Given Warner Music Group’s stronger consensus rating and higher possible upside, analysts plainly believe Warner Music Group is more favorable than Gaia.

Risk & Volatility

Gaia has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Warner Music Group has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Institutional & Insider Ownership

40.5% of Gaia shares are owned by institutional investors. Comparatively, 96.9% of Warner Music Group shares are owned by institutional investors. 26.0% of Gaia shares are owned by company insiders. Comparatively, 0.1% of Warner Music Group shares are owned 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.

Earnings & Valuation

This table compares Gaia and Warner Music Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gaia	$98.95 million	0.39	-$4.49 million	($0.24)	-6.33
Warner Music Group	$6.71 billion	2.18	$365.00 million	$1.26	22.17

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

Profitability

This table compares Gaia and Warner Music Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gaia	-6.08%	-5.82%	-3.85%
Warner Music Group	9.20%	85.50%	7.00%

Summary

Warner Music Group beats Gaia on 13 of the 14 factors compared between the two stocks.

About Gaia

Gaia, Inc. operates a digital video subscription service and online community for underserved member base in the United States, Canada, Australia, and internationally. The company has a digital content library with various titles in Spanish, German, and French languages available to its subscribers on internet connected devices. Its network includes Yoga channel, which provides access to streaming yoga, Eastern arts, and other movement based classes; Transformation channel that offers content in the areas of spiritual growth, personal development, and expanded consciousness; Alternative Healing channel, which features content focused on food and nutrition, holistic healing, alternative and integrative medicines, and longevity; and Seeking Truth channel that provides access to interviews and presentations in the ancient wisdom and metaphysics genre. The company was formerly known as Gaiam, Inc. and changed its name to Gaia, Inc. in July 2016. Gaia, Inc. was incorporated in 1988 and is headquartered in Louisville, Colorado.

About Warner Music Group

Warner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. It operates through Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as related marketing, promotion, distribution, sale, and licensing of music created by such recording artists; markets its music catalog through compilations and reissuances of previously released music and video titles, as well as previously unreleased materials; and conducts its operation primarily through a collection of record labels, such as Warner Records and Atlantic Records, as well as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin’ Records, Warner Classics, and Warner Music Nashville. This segment markets, distributes, and sells music and video products to retailers and wholesale distributors; independent labels to retail and wholesale distributors; and various distribution centers and ventures, as well as retail outlets, online physical retailers, streaming services, and download services. The Music Publishing segment owns and acquires rights to approximately one million musical compositions comprising pop hits, American standards, folk songs, and motion picture and theatrical compositions. Its catalog includes approximately 150,000 songwriters and composers; and various genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative, and gospel. This segment also administers the music and soundtracks of various third-party television and film producers and studios. The company was founded in 1929 and is headquartered in New York, New York.