Reynolds Consumer Products (NASDAQ:REYN) and Rogers Communications (NYSE:RCI) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.
Analyst Ratings
This is a summary of recent ratings for Reynolds Consumer Products and Rogers Communications, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Reynolds Consumer Products | 0 | 1 | 4 | 0 | 2.80 |
| Rogers Communications | 0 | 3 | 8 | 0 | 2.73 |
Reynolds Consumer Products currently has a consensus target price of $35.00, suggesting a potential upside of 16.67%. Rogers Communications has a consensus target price of $68.6250, suggesting a potential upside of 42.20%. Given Rogers Communications' higher possible upside, analysts clearly believe Rogers Communications is more favorable than Reynolds Consumer Products.
Profitability
This table compares Reynolds Consumer Products and Rogers Communications' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Reynolds Consumer Products | 10.62% | 25.37% | 8.16% |
| Rogers Communications | 11.38% | 17.61% | 4.51% |
Dividends
Reynolds Consumer Products pays an annual dividend of $0.92 per share and has a dividend yield of 3.1%. Rogers Communications pays an annual dividend of $1.54 per share and has a dividend yield of 3.2%. Reynolds Consumer Products pays out 63.4% of its earnings in the form of a dividend. Rogers Communications pays out 49.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Reynolds Consumer Products has increased its dividend for 1 consecutive years and Rogers Communications has increased its dividend for 1 consecutive years. Rogers Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
26.3% of Reynolds Consumer Products shares are held by institutional investors. Comparatively, 53.5% of Rogers Communications shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Reynolds Consumer Products and Rogers Communications' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Reynolds Consumer Products | $3.03 billion | 2.07 | $225 million | $1.45 | 20.69 |
| Rogers Communications | $11.36 billion | 2.15 | $1.54 billion | $3.13 | 15.42 |
Rogers Communications has higher revenue and earnings than Reynolds Consumer Products. Rogers Communications is trading at a lower price-to-earnings ratio than Reynolds Consumer Products, indicating that it is currently the more affordable of the two stocks.
Summary
Rogers Communications beats Reynolds Consumer Products on 11 of the 14 factors compared between the two stocks.
