Time Warner Inc (TWX): This Company Is Always Coming in Second

In addition, Time Warner Inc (NYSE:TWX)’s dividend is safe, but their payout ratio places them second highest with only Disney performing worse. Disney’s core free cash flow payout ratio (net income + depreciation – capital expenditures vs. dividend payments) was 44.06% in the current quarter. By comparison, Time Warner paid out 32.04%, Comcast Corporation (NASDAQ:CMCSA) paid 19.06%, and CBS Corporation (NYSE:CBS) paid just 14.86%.

So What Should Investors Do?
In total, Time Warner offers the best operating cash flow growth, the second best share repurchase record, and at the second best relative value. While the company’s operating margin could be higher, it’s not far behind Disney, and the comparison to Comcast is a bit unfair because of their cable business.

When it comes to Time Warner Inc (NYSE:TWX)’s second highest payout ratio, while it’s true that a few of their peers have lower ratios, only Comcast has a lower ratio, and a higher yield. If you want the fastest growing company no matter the price, Time Warner has already lost that race.

Given Time Warner’s strengths and weaknesses, the stock looks like a good value at the present time. Of its peers, the only company I might consider instead would be Comcast Corporation (NASDAQ:CMCSA). Comcast offers about the same yield, a better growth rate, better margins, at almost the same P/E ratio. However, between Comcast and Time Warner, it seems like investors should do well either way. I guess second place isn’t so bad after all.

Chad Henage has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney.

The article This Company Is Always Coming in Second originally appeared on Fool.com.

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