Head to Head Contrast: Tencent Music Entertainment Group (NYSE:TME) & TKO Group (NYSE:TKO)

TKO Group (NYSE:TKO) and Tencent Music Entertainment Group (NYSE:TME) are both large-cap communication services companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, risk, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of recent ratings for TKO Group and Tencent Music Entertainment Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TKO Group	0	6	11	0	2.65
Tencent Music Entertainment Group	0	10	3	0	2.23

TKO Group presently has a consensus price target of $238.08, suggesting a potential upside of 25.13%. Tencent Music Entertainment Group has a consensus price target of $17.21, suggesting a potential upside of 117.97%. Given Tencent Music Entertainment Group’s higher probable upside, analysts clearly believe Tencent Music Entertainment Group is more favorable than TKO Group.

Volatility & Risk

TKO Group has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Tencent Music Entertainment Group has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.

Profitability

This table compares TKO Group and Tencent Music Entertainment Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TKO Group	4.33%	2.67%	1.49%
Tencent Music Entertainment Group	26.27%	11.53%	8.87%

Institutional & Insider Ownership

89.8% of TKO Group shares are held by institutional investors. Comparatively, 24.3% of Tencent Music Entertainment Group shares are held by institutional investors. 64.3% of TKO Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

TKO Group pays an annual dividend of $3.16 per share and has a dividend yield of 1.7%. Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.9%. TKO Group pays out 110.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tencent Music Entertainment Group pays out 28.4% of its earnings in the form of a dividend. Tencent Music Entertainment Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares TKO Group and Tencent Music Entertainment Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TKO Group	$4.74 billion	7.60	$195.40 million	$2.85	66.76
Tencent Music Entertainment Group	$4.71 billion	2.64	$1.54 billion	$0.81	9.75

Tencent Music Entertainment Group has lower revenue, but higher earnings than TKO Group. Tencent Music Entertainment Group is trading at a lower price-to-earnings ratio than TKO Group, indicating that it is currently the more affordable of the two stocks.

About TKO Group

TKO Group Holdings, Inc. operates as a sports and entertainment company. The company produces and licenses live events, television programs, and long-form and short-form content, reality series, and other filmed entertainment on digital and linear channels and via pay-per-view. It is involved in the merchandising of video games, apparel, equipment, trading cards, memorabilia, digital goods, and toys, as well as sale of travel packages and tickets. In addition, the company engages in the corporate sponsorships and advertising business, which offers sale of in-venue and in-broadcast advertising assets, content product integration, and digital impressions. The company was incorporated in 2023 and is based in New York, New York. TKO Group Holdings, Inc. is a subsidiary of Endeavor Group Holdings, Inc.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.