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4 Media Companies With Outstanding Profit Margins

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GuruFocus.com
·3 min read
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In light of investors and sports fans gearing up for the 2020 NFL Draft, four entertainment and interactive media companies that have high financial strength and operating margins outperforming industry competitors are Autohome Inc. (NYSE:ATHM), Dolby Laboratories Inc. (NYSE:DLB), Electronic Arts Inc. (NASDAQ:EA) and Facebook Inc. (NASDAQ:FB) according to the All-in-One Screener, a GuruFocus Premium feature.


NFL conducts draft remotely due to coronavirus outbreak

NFL Commissioner Roger Goodell announced in March that due to the ongoing coronavirus outbreak, which has spread to over 800,000 cases in the U.S. as of Thursday according to John Hopkins University statistics, the 2020 NFL Draft will go on without public events and audiences. Goodell added this morning that he will conduct the draft in his basement and offer a new way to "socialize and bring people together" during the virus outbreak.

As such, investors might find opportunities in media companies that might broadcast the draft beyond the trivial companies like The Walt Disney Co.'s (NYSE:DIS) ESPN. The Screener identified four companies with high financial strength and operating margins that outperform over 80% of global competitors.

Autohome

Autohome delivers comprehensive, independent and interactive content to automobile buyers and owners. GuruFocus ranks the Chinese interactive media company's financial strength and profitability 9 out of 10 on several positive investing signs, which include debt ratios and profit margins that outperform over 90% of global competitors.

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ccc99241961b4b88b408bc7b22460863.png

Gurus with holdings in Autohome include Pioneer Investments (Trades, Portfolio) and Ray Dalio (Trades, Portfolio)'s Bridgewater Associates.

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9d6b4cc5b79b4c7ceb1de7abe9c0e73b.png

Dolby Laboratories

Dolby Laboratories develops audio and surround sound for cinema, broadcast, home audio systems and in-car entertainment systems. GuruFocus ranks the company's financial strength 9 out of 10 on several positive investing signs, which include debt ratios that outperform over 82% of global competitors and interest coverage ratios that outperform over 91% of global diversified media companies.

6f372799b70e57d661bc30b8c7521b51.png
6f372799b70e57d661bc30b8c7521b51.png

Dolby's profitability ranks 8 out of 10 on the back of profit margins that outperform over 90% of global competitors despite contracting over the past five years.

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fbab687962fe52684793c4335539905d.png

Jim Simons (Trades, Portfolio)' Renaissance Technologies has a holding in Dolby.

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632984a724e602e8496db19a56afef86.png

Electronic Arts

Electronic Arts publishes a wide range of video games, including "Madden NFL," "FIFA," "Battlefield" and "Need for Speed." GuruFocus ranks the Redwood City, California-based company's financial strength and profitability 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 7.33 and returns that are outperforming over 95% of global competitors.

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71554a249a1433dd588ecdb7b7c99c9c.png

Facebook

Facebook operates a wide range of social media platforms like Facebook, Instagram and WhatsApp. GuruFocus ranks the Menlo Park, California-based company's financial strength 8 out of 10 and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage, a high Altman Z-score of 11, expanding operating margins and a return on assets that outperforms over 85% of global competitors.

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23aa6879ab1cac66a1ffa0e556fd20b5.png

Disclosure: Author has no positions in the stocks mentioned.

Important: To screen for stocks where operating margin outperforms over 80% of global competitors, you must set the "Operating Margin Rank in Industry" filter at most the 20th percentile as illustrated in the image below.

The 20th percentile means that the company's operating margin underperforms at most 20% of global industry competitors.

Read more here:

  • 5 Pharmaceutical Companies to Consider as Coronavirus Vaccine Race Heats Up

  • Leith Wheeler Canadian Equity Fund's Top 5 Buys in 2nd Half of 2019

  • Netflix Sees Abnormal Global Subscription Growth in the 1st Quarter



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This article first appeared on GuruFocus.