Financial Analysis: Entercom Communications Corporation (ETM) versus Pandora Media (P)

Pandora Media (NYSE: P) and Entercom Communications Corporation (NYSE:ETM) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitabiliy.

Risk and Volatility

Pandora Media has a beta of 0.07, suggesting that its stock price is 93% less volatile than the S&P 500. Comparatively, Entercom Communications Corporation has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Pandora Media and Entercom Communications Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pandora Media 1 20 16 0 2.41
Entercom Communications Corporation 0 0 1 0 3.00

Pandora Media presently has a consensus target price of $13.23, indicating a potential upside of 88.42%. Given Pandora Media’s higher possible upside, research analysts clearly believe Pandora Media is more favorable than Entercom Communications Corporation.

Valuation & Earnings

This table compares Pandora Media and Entercom Communications Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pandora Media $1.40 billion 1.21 -$256.51 million ($1.54) -4.56
Entercom Communications Corporation $461.59 million 0.90 $101.22 million $0.56 18.21

Entercom Communications Corporation has higher revenue, but lower earnings than Pandora Media. Pandora Media is trading at a lower price-to-earnings ratio than Entercom Communications Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Pandora Media and Entercom Communications Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pandora Media -25.66% -45.15% -21.73%
Entercom Communications Corporation 5.27% 8.79% 3.28%

Dividends

Entercom Communications Corporation pays an annual dividend of $0.30 per share and has a dividend yield of 2.9%. Pandora Media does not pay a dividend. Entercom Communications Corporation pays out 53.6% of its earnings in the form of a dividend.

Institutional & Insider Ownership

50.5% of Entercom Communications Corporation shares are owned by institutional investors. 6.6% of Pandora Media shares are owned by insiders. Comparatively, 32.6% of Entercom Communications Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Entercom Communications Corporation beats Pandora Media on 10 of the 15 factors compared between the two stocks.

Pandora Media Company Profile

Pandora Media, Inc. (Pandora) is a music discovery platform, offering a personalized experience for each of its listeners wherever and whenever they want to listen to music, whether through earbuds, car speakers or live on stage. The Company delivers targeted messages to its listeners using a combination of audio, display and video advertisements. Its segments include Pandora-Internet Radio Service and Ticketfly. As of December 31, 2016, it provided Pandora service through two models: advertising-supported service and subscription service-Pandora Plus. Pandora is integrated with connected devices, including automobiles, automotive aftermarket devices and consumer electronic devices. Its Ticketfly service is a cloud ticketing platform for live events. It operates ticketing service through its subsidiary, Ticketfly, a live events technology company that provides ticketing and marketing software and services for its clients, which are venues and event promoters, across North America.

Entercom Communications Corporation Company Profile

Entercom Communications Corp. is a radio broadcasting company. The Company sells advertising time to local, regional and national advertisers and national network advertisers, purchasing spot commercials in varying lengths. It focuses on station-related digital platforms, which allow for audience interaction and participation, and integrated local digital marketing solutions and station events. Its stations are classified by their format, such as news, sports, talk, classic rock, urban, adult contemporary, alternative and country, among others. As of December 31, 2016, it had a portfolio of radio stations in 28 markets across the United States. It operates in various markets, which include Boston, Buffalo, Denver, Kansas City, Miami, Sacramento, San Francisco and Seattle. Its radio stations include KSWD Frequency Modulation (FM), KOSI FM, KYGO FM, KEPN AM, KKFN FM, KQKS FM, KRWZ Amplitude Modulation (AM), WSTR FM, WAXY AM/FM, WLYF FM, WMXJ FM, KBZT FM, KSON FM/KSOQ FM and KIFM FM.

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