Critical Contrast: Graham (NYSE:GHC) & Bright Horizons Family Solutions (NYSE:BFAM)

Graham (NYSE:GHC) and Bright Horizons Family Solutions (NYSE:BFAM) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, analyst recommendations, earnings, valuation and risk.

Institutional & Insider Ownership

93.2% of Graham shares are held by institutional investors. 18.6% of Graham shares are held by company insiders. Comparatively, 1.4% of Bright Horizons Family Solutions shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Graham has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Bright Horizons Family Solutions has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Graham and Bright Horizons Family Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graham	0	0	1	1	3.50
Bright Horizons Family Solutions	2	3	4	0	2.22

Bright Horizons Family Solutions has a consensus price target of $92.00, indicating a potential upside of 37.55%. Given Bright Horizons Family Solutions’ higher probable upside, analysts clearly believe Bright Horizons Family Solutions is more favorable than Graham.

Valuation and Earnings

This table compares Graham and Bright Horizons Family Solutions”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graham	$4.91 billion	1.05	$292.29 million	$124.08	9.86
Bright Horizons Family Solutions	$2.93 billion	1.11	$193.12 million	$3.16	21.17

Graham has higher revenue and earnings than Bright Horizons Family Solutions. Graham is trading at a lower price-to-earnings ratio than Bright Horizons Family Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Graham and Bright Horizons Family Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graham	10.69%	5.73%	3.32%
Bright Horizons Family Solutions	5.78%	20.09%	6.35%

Summary

Graham beats Bright Horizons Family Solutions on 8 of the 15 factors compared between the two stocks.

About Graham

Graham Holdings Company, through its subsidiaries, operates as a diversified education and media company in the United States and internationally. It provides test preparation services and materials; professional training and exam preparation for professional certifications and licensures; and non-academic operations support services to the Purdue University Global; operations support services for online courses and programs; training and test preparation services for accounting and financial services professionals; English-language training, academic preparation programs, and test preparation for English proficiency exams; and A-level examination preparation services, as well as operates colleges, business school, higher education institution, and an online learning institution. The company also owns and operates television stations, restaurants, and entertainment venues; engages in the financial training and automobile dealerships business; offers social media management tools to connect newsrooms with their users; produces Foreign Policy magazine and ForeignPolicy.com website; and publishes Slate, an online magazine, as well as French-language news magazine websites at slate.fr and slateafrique.com. In addition, it provides social media marketing solutions; home health, hospice, and palliative services; burners, igniters, dampers, and controls; screw jacks, linear actuators, and related linear motion products, and lifting systems; pressure impregnated kiln-dried lumber and plywood products; digital advertising services; power charging and data systems, industrial and commercial indoor lighting solutions, and electrical components and assemblies; dermatology and professional aesthetics, and skin care services; software and services; and operates pharmacy. The company was formerly known as The Washington Post Company and changed its name to Graham Holdings Company in November 2013. Graham Holdings Company was founded in 1877 and is based in Arlington, Virginia.

About Bright Horizons Family Solutions

Bright Horizons Family Solutions Inc. provides early education and childcare, back-up care, educational advisory, and other workplace solutions services for employers and families in the United States, Puerto Rico, the United Kingdom, the Netherlands, Australia, and India. The company operates in three segments: Full Service Center-Based Child Care, Back-Up Care, and Educational Advisory and Other Services. The Full Service Center-Based Child Care segment offers traditional center-based child care and early education, preschool, and elementary education services. The Back-Up Care segment provides center-based back-up child care, in-home child and adult/elder dependent care, school-age camps, virtual tutoring, and self-sourced reimbursed care services through child care centers, school-age campuses, and in-home caregivers, as well as the back-up care network. The Educational Advisory and Other Services segment offers tuition assistance and student loan repayment program administration, workforce education, and related educational consulting services, as well as college admissions and college financial advisory services. The company was formerly known as Bright Horizons Solutions Corp. and changed its name to Bright Horizons Family Solutions Inc. in July 2012. Bright Horizons Family Solutions Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.