Analyzing Warner Music Group (NASDAQ:WMG) and Lucky Strike Entertainment (NYSE:LUCK)

Warner Music Group (NASDAQ:WMG) and Lucky Strike Entertainment (NYSE:LUCK) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Warner Music Group	8.07%	79.01%	5.71%
Lucky Strike Entertainment	1.11%	-35.76%	1.68%

Insider & Institutional Ownership

96.9% of Warner Music Group shares are owned by institutional investors. Comparatively, 68.1% of Lucky Strike Entertainment shares are owned by institutional investors. 72.2% of Warner Music Group shares are owned by insiders. Comparatively, 79.9% of Lucky Strike Entertainment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Warner Music Group pays an annual dividend of $0.72 per share and has a dividend yield of 2.5%. Lucky Strike Entertainment pays an annual dividend of $0.22 per share and has a dividend yield of 2.6%. Warner Music Group pays out 73.5% of its earnings in the form of a dividend. Lucky Strike Entertainment pays out -2,200.0% 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. Lucky Strike Entertainment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Warner Music Group has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, Lucky Strike Entertainment has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Valuation and Earnings

This table compares Warner Music Group and Lucky Strike Entertainment”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Warner Music Group	$6.34 billion	2.39	$435.00 million	$0.98	29.71
Lucky Strike Entertainment	$1.18 billion	1.03	-$83.58 million	($0.01)	-848.00

Warner Music Group has higher revenue and earnings than Lucky Strike Entertainment. Lucky Strike Entertainment 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Warner Music Group and Lucky Strike Entertainment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Warner Music Group	2	5	10	0	2.47
Lucky Strike Entertainment	0	1	1	0	2.50

Warner Music Group presently has a consensus price target of $35.76, indicating a potential upside of 22.82%. Lucky Strike Entertainment has a consensus price target of $10.50, indicating a potential upside of 23.82%. Given Lucky Strike Entertainment’s stronger consensus rating and higher probable upside, analysts clearly believe Lucky Strike Entertainment is more favorable than Warner Music Group.

Summary

Warner Music Group beats Lucky Strike Entertainment on 11 of the 16 factors compared between the two stocks.

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.

About Lucky Strike Entertainment

Lucky Strike Entertainment Corp. engages in operating bowling centers. It offers entertainment concepts with lounge seating, arcades, food and beverage offerings, and hosting and overseeing professional and non-professional bowling tournaments and related broadcasting. The company was founded by Thomas F. Shannon in 1997 and is headquartered in Mechanicsville, VA.