Head-To-Head Analysis: Lionsgate Studios (NYSE:LION) vs. Tencent Music Entertainment Group (NYSE:TME)

Tencent Music Entertainment Group (NYSE:TME) and Lionsgate Studios (NYSE:LION) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, valuation, earnings and risk.

Profitability

This table compares Tencent Music Entertainment Group and Lionsgate Studios’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	34.00%	11.46%	8.95%
Lionsgate Studios	-6.19%	N/A	-1.86%

Institutional and Insider Ownership

24.3% of Tencent Music Entertainment Group shares are held by institutional investors. 9.4% of Lionsgate Studios shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Tencent Music Entertainment Group and Lionsgate Studios, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent Music Entertainment Group	0	2	10	1	2.92
Lionsgate Studios	1	5	8	1	2.60

Tencent Music Entertainment Group presently has a consensus target price of $24.29, indicating a potential upside of 29.91%. Lionsgate Studios has a consensus target price of $8.73, indicating a potential upside of 30.84%. Given Lionsgate Studios’ higher probable upside, analysts plainly believe Lionsgate Studios is more favorable than Tencent Music Entertainment Group.

Earnings and Valuation

This table compares Tencent Music Entertainment Group and Lionsgate Studios”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	8.25	$924.18 million	$0.91	20.54
Lionsgate Studios	$3.11 billion	0.62	-$125.30 million	($0.67)	-9.96

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

Risk & Volatility

Tencent Music Entertainment Group has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Lionsgate Studios has a beta of -0.12, meaning that its share price is 112% less volatile than the S&P 500.

Dividends

Tencent Music Entertainment Group pays an annual dividend of $0.17 per share and has a dividend yield of 0.9%. Lionsgate Studios pays an annual dividend of $0.48 per share and has a dividend yield of 7.2%. Tencent Music Entertainment Group pays out 18.7% of its earnings in the form of a dividend. Lionsgate Studios pays out -71.6% 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. Lionsgate Studios is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Tencent Music Entertainment Group beats Lionsgate Studios on 12 of the 16 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 Lionsgate Studios

Lionsgate Studios Corp. engages in the provision of motion picture and studio operations that bring a varied portfolio of entertainment to consumers. The company is headquartered in Santa Monica, CA.