Pinnacle Entertainment (NASDAQ: PNK) and Eldorado Resorts (NASDAQ:ERI) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitabiliy, risk, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares Pinnacle Entertainment and Eldorado Resorts’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle Entertainment -19.73% N/A -3.48%
Eldorado Resorts 2.49% 7.95% 1.71%

Insider & Institutional Ownership

88.4% of Pinnacle Entertainment shares are owned by institutional investors. Comparatively, 65.2% of Eldorado Resorts shares are owned by institutional investors. 8.3% of Pinnacle Entertainment shares are owned by company insiders. Comparatively, 1.1% of Eldorado Resorts shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Pinnacle Entertainment and Eldorado Resorts’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pinnacle Entertainment $2.44 billion 0.46 $612.42 million ($7.93) -2.44
Eldorado Resorts $880.26 million 1.68 $159.52 million $0.47 41.49

Pinnacle Entertainment has higher revenue and earnings than Eldorado Resorts. Pinnacle Entertainment is trading at a lower price-to-earnings ratio than Eldorado Resorts, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Pinnacle Entertainment has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Eldorado Resorts has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Pinnacle Entertainment and Eldorado Resorts, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle Entertainment 0 3 3 0 2.50
Eldorado Resorts 0 0 2 0 3.00

Pinnacle Entertainment presently has a consensus target price of $19.83, indicating a potential upside of 2.34%. Eldorado Resorts has a consensus target price of $21.50, indicating a potential upside of 10.26%. Given Eldorado Resorts’ stronger consensus rating and higher possible upside, analysts clearly believe Eldorado Resorts is more favorable than Pinnacle Entertainment.

Summary

Eldorado Resorts beats Pinnacle Entertainment on 7 of the 13 factors compared between the two stocks.

Pinnacle Entertainment Company Profile

Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment businesses. The Company operates through three segments: Midwest, South and West. The Company’s Midwest segment includes Ameristar Council Bluffs, Ameristar East Chicago, Ameristar Kansas City, Ameristar St. Charles, Belterra, Belterra Park, Meadows and River City. The Company’s South segment includes Ameristar Vicksburg, Boomtown Bossier City, Boomtown New Orleans, L’Auberge Baton Rouge and L’Auberge Lake Charles. The Company’s West segment includes Ameristar Black Hawk and Cactus Petes and Horseshu. As of September 30, 2016, the Company owned and operated 16 gaming entertainment businesses, located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania. The Company’s gaming entertainment businesses include gaming, food and beverage, and retail facilities, which include hotel and resort amenities.

Eldorado Resorts Company Profile

Eldorado Resorts, Inc. is a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. The Company’s segments are Nevada, Louisiana, Eastern and Corporate. As of May 1, 2017, the Company owned and operated approximately 503,000 square feet of casino space with approximately 20,000 slot machines and video lottery terminals (VLTs), over 550 table and poker games, 45 restaurants and 6,500 hotel rooms. As of December 31, 2016, the Company owned and operated various properties, including Eldorado Resort Casino Reno (Eldorado Reno), Silver Legacy Resort Casino (Silver Legacy), Circus Circus Reno (Circus Reno), Eldorado Resort Casino Shreveport (Eldorado Shreveport), Mountaineer Casino, Racetrack & Resort (Mountaineer), Presque Isle Downs & Casino (Presque Isle Downs), and Eldorado Gaming Scioto Downs (Scioto Downs).

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