Universal vs Paramount Which Is a Better Investment?

Universal Studios and Paramount Pictures are two major players in the entertainment industry, each with its own unique history and portfolio of popular movies and television shows. When it comes to their respective stocks, investors often weigh the pros and cons of investing in Universal's parent company, Comcast, and Paramount's parent company, ViacomCBS. Both companies have faced challenges in recent years due to changing consumer media habits and increased competition in the streaming space. Ultimately, choosing between Universal and Paramount stocks may depend on individual investment goals and risk tolerance.

Universal or Paramount?

When comparing Universal and Paramount, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Universal and Paramount.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Universal has a dividend yield of 5.7%, while Paramount has a dividend yield of 2.14%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Universal reports a 5-year dividend growth of 4.11% year and a payout ratio of 64.59%. On the other hand, Paramount reports a 5-year dividend growth of -14.52% year and a payout ratio of -15.70%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Universal P/E ratio at 11.54 and Paramount's P/E ratio at -4.99. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Universal P/B ratio is 0.99 while Paramount's P/B ratio is 0.34.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Universal has seen a 5-year revenue growth of 0.29%, while Paramount's is 0.08%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Universal's ROE at 8.62% and Paramount's ROE at -6.68%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $55.58 for Universal and $4.79 for Paramount. Over the past year, Universal's prices ranged from $45.19 to $67.80, with a yearly change of 50.03%. Paramount's prices fluctuated between $4.21 and $5.76, with a yearly change of 36.75%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.