Warner Music Group (NASDAQ:WMG) versus Cedar Fair (NYSE:FUN) Critical Survey

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

Dividends

Cedar Fair pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. Warner Music Group pays an annual dividend of $0.72 per share and has a dividend yield of 2.3%. Cedar Fair pays out -93.8% of its earnings in the form of a dividend. Warner Music Group pays out 86.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Cedar Fair has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500. Comparatively, Warner Music Group has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Cedar Fair and Warner Music Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cedar Fair	1	1	12	0	2.79
Warner Music Group	2	5	8	0	2.40

Cedar Fair currently has a consensus target price of $56.07, indicating a potential upside of 17.97%. Warner Music Group has a consensus target price of $35.67, indicating a potential upside of 11.67%. Given Cedar Fair’s stronger consensus rating and higher probable upside, equities analysts clearly believe Cedar Fair is more favorable than Warner Music Group.

Valuation and Earnings

This table compares Cedar Fair 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
Cedar Fair	$1.82 billion	2.62	$124.56 million	($0.64)	-74.27
Warner Music Group	$6.43 billion	2.57	$435.00 million	$0.83	38.48

Warner Music Group has higher revenue and earnings than Cedar Fair. Cedar Fair 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.

Institutional & Insider Ownership

64.7% of Cedar Fair shares are owned by institutional investors. Comparatively, 96.9% of Warner Music Group shares are owned by institutional investors. 1.8% of Cedar Fair shares are owned by company insiders. Comparatively, 73.3% of Warner Music Group shares are owned 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cedar Fair	0.99%	113.05%	2.41%
Warner Music Group	6.77%	69.29%	4.87%

Summary

Warner Music Group beats Cedar Fair on 9 of the 16 factors compared between the two stocks.

About Cedar Fair

Cedar Fair, L.P. owns and operates amusement and water parks, as well as complementary resort facilities. Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm near Los Angeles, California; Canada's Wonderland near Toronto, Ontario; Kings Island near Cincinnati, Ohio; Carowinds in Charlotte, North Carolina; Kings Dominion situated near Richmond, Virginia; California's Great America located in Santa Clara, California; Dorney Park in Pennsylvania; Worlds of Fun located in Kansas City, Missouri; Valleyfair situated near Minneapolis/St. Paul, Minnesota; Michigan's Adventure situated near Muskegon, Michigan; Schlitterbahn Waterpark & Resort New Braunfels in New Braunfels, Texas; and Schlitterbahn Waterpark Galveston in Galveston, Texas. The company also owns and operates the Castaway Bay Indoor Waterpark Resort, Hotel Breakers, Cedar Point's Express Hotel, and Sawmill Creek Resort. Cedar Fair, L.P. was founded in 1983 and is based in Sandusky, Ohio.

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.