Netflix (NASDAQ: NFLX) and IAC/InterActiveCorp (NASDAQ:IAC) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.
Volatility and Risk
Netflix has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500. Comparatively, IAC/InterActiveCorp has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.
Institutional & Insider Ownership
81.0% of Netflix shares are owned by institutional investors. Comparatively, 85.4% of IAC/InterActiveCorp shares are owned by institutional investors. 4.9% of Netflix shares are owned by company insiders. Comparatively, 11.3% of IAC/InterActiveCorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Netflix and IAC/InterActiveCorp’s gross revenue, earnings per share and valuation.
Netflix has higher revenue and earnings than IAC/InterActiveCorp. IAC/InterActiveCorp is trading at a lower price-to-earnings ratio than Netflix, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for Netflix and IAC/InterActiveCorp, as reported by MarketBeat.
Netflix presently has a consensus price target of $206.18, indicating a potential upside of 6.41%. IAC/InterActiveCorp has a consensus price target of $132.00, indicating a potential upside of 6.56%. Given IAC/InterActiveCorp’s stronger consensus rating and higher possible upside, analysts plainly believe IAC/InterActiveCorp is more favorable than Netflix.
This table compares Netflix and IAC/InterActiveCorp’s net margins, return on equity and return on assets.
IAC/InterActiveCorp beats Netflix on 8 of the 14 factors compared between the two stocks.
Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.
IAC/InterActiveCorp (IAC) is a media and Internet company. The Company’s brands include HomeAdvisor, Vimeo, Dictionary.com and Match Group’s online dating portfolio, which includes Tinder, PlentyOfFish and OkCupid. Its segments include Match Group, HomeAdvisor, Video, Applications and Publishing. Match Group includes the dating and non-dating businesses of Match Group, Inc. HomeAdvisor is a home services digital marketplace that helps connect consumers with home professionals in North America, as well as in France, the Netherlands and Italy under various brands. Its Video consists of Vimeo, Electus, CollegeHumor, Notional, IAC Films and Daily Burn. Applications consists of Consumer, which include its direct-to-consumer downloadable desktop applications, Apalon, which houses its mobile applications and SlimWare, and Partnerships, which includes its business-to-business partnership operations. Publishing consists of Premium Brands business, and Ask & Other business.