Financial Contrast: Sinclair (NASDAQ:SBGI) and Scholastic (NASDAQ:SCHL)

Scholastic (NASDAQ:SCHL) and Sinclair (NASDAQ:SBGI) are both small-cap communication services companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Scholastic and Sinclair, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Scholastic	1	2	0	0	1.67
Sinclair	1	3	2	0	2.17

Scholastic presently has a consensus target price of $42.00, indicating a potential upside of 19.08%. Sinclair has a consensus target price of $19.40, indicating a potential upside of 40.38%. Given Sinclair’s stronger consensus rating and higher possible upside, analysts clearly believe Sinclair is more favorable than Scholastic.

Earnings and Valuation

This table compares Scholastic and Sinclair”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Scholastic	$1.58 billion	0.42	$56.70 million	$2.34	15.07
Sinclair	$3.17 billion	0.32	-$112.00 million	$0.75	18.43

Scholastic has higher earnings, but lower revenue than Sinclair. Scholastic is trading at a lower price-to-earnings ratio than Sinclair, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

82.6% of Scholastic shares are held by institutional investors. Comparatively, 41.7% of Sinclair shares are held by institutional investors. 12.8% of Scholastic shares are held by insiders. Comparatively, 42.1% of Sinclair shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Scholastic pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Sinclair pays an annual dividend of $1.00 per share and has a dividend yield of 7.2%. Scholastic pays out 42.7% of its earnings in the form of a dividend. Sinclair pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Scholastic and Sinclair’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Scholastic	3.58%	5.29%	2.43%
Sinclair	1.60%	-16.09%	-0.95%

Risk and Volatility

Scholastic has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, Sinclair has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.

About Scholastic

Scholastic Corporation publishes and distributes children’s books worldwide. It operates in three segments: Children’s Book Publishing and Distribution, Education Solutions, and International. The Children’s Book Publishing and Distribution segment engages in publication and distribution of children’s print, digital, and audio books, as well as media and interactive products through its school reading events and trade channel; and operation of school-based book clubs and book fairs in the United States. Its original publications include The Harry Potter, The Hunger Games, The Bad Guys, The Baby-Sitters Club, The Magic School Bus, Captain Underpants, Dog Man, Wings of Fire, Cat Kid Comic Club, and Clifford The Big Red Dog, as well as I Survived, Goosebumps; licensed properties comprising the Peppa Pig and Pokemon; and publishes and creates Klutz and Make Believe Ideas titles, such as Mini Shake Shop, Pokemon Stained Glass, LEGO Miniature Photography, and the Never Touch series. The Education Solutions segment publishes and distributes classroom magazines under the Scholastic News, Scholastic Scope, Storyworks, Let’s Find Out, and Junior Scholastic names; supplemental and classroom materials and programs, and related support services; and print and on-line reference, and non-fiction products, as well as consulting services. The International segment publishes and distributes English, Hindi, and French language children’s books; and operates school-based marketing channels, as well as supply original and licensed children’s books, and supplemental educational materials including professional books for teachers. It distributes its products and services directly to schools and libraries through retail stores and the Internet. The company was founded in 1920 and is headquartered in New York, New York.

About Sinclair

Sinclair, Inc., a media company, provides content on local television stations and digital platforms in the United States. It operates through two segments, Local Media and Tennis. The Local Media segment operates broadcast television stations, original networks, and content; provides free-over-the-air programming and live local sporting events on its stations; distributes its content to multi-channel video programming distributors in exchange for contractual fees; and produces local and original news programs. This segment operates The Nest, a free over-the-air national broadcast TV network; Comet, a science fiction network; CHARGE!, an adventure and action-based network; and TBD, a multiscreen TV network. The Tennis segment offers Tennis Channel, a cable network which includes coverage of tennis' top tournaments and original professional sports, and tennis lifestyle shows; Tennis Channel International streaming service; Tennis Channel Plus streaming service; T2 FAST, a 24-hours a day free ad-supported streaming television channel; and Tennis.com and Pickleballtv. It also provides digital and internet solutions; and technical services, including the design and manufacture of broadcast systems. The company distributes its content through broadcast platforms and third-party platforms that consist of programming provided by third-party networks and syndicators, local news, and other original programming. Sinclair, Inc. was founded in 1971 and is headquartered in Hunt Valley, Maryland.