Red Rock Resorts (NASDAQ: RRR) and Churchill Downs, (NASDAQ:CHDN) are both mid-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitabiliy, institutional ownership, earnings and dividends.

Dividends

Red Rock Resorts pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Churchill Downs, pays an annual dividend of $1.32 per share and has a dividend yield of 0.7%. Red Rock Resorts pays out 45.5% of its earnings in the form of a dividend. Churchill Downs, pays out 19.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk and Volatility

Red Rock Resorts has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500. Comparatively, Churchill Downs, has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Valuation & Earnings

This table compares Red Rock Resorts and Churchill Downs,’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Rock Resorts $1.51 billion 1.04 $493.64 million $0.88 27.20
Churchill Downs, $1.30 billion 2.30 $298.80 million $6.67 27.50

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

Institutional & Insider Ownership

58.4% of Red Rock Resorts shares are held by institutional investors. Comparatively, 69.1% of Churchill Downs, shares are held by institutional investors. 40.9% of Red Rock Resorts shares are held by company insiders. Comparatively, 18.4% of Churchill Downs, shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Red Rock Resorts and Churchill Downs,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Rock Resorts 3.58% 10.00% 1.83%
Churchill Downs, 8.66% 14.14% 4.33%

Analyst Recommendations

This is a summary of recent recommendations for Red Rock Resorts and Churchill Downs,, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Rock Resorts 0 2 10 0 2.83
Churchill Downs, 0 3 2 0 2.40

Red Rock Resorts currently has a consensus price target of $26.15, indicating a potential upside of 9.23%. Churchill Downs, has a consensus price target of $172.67, indicating a potential downside of 5.88%. Given Red Rock Resorts’ stronger consensus rating and higher probable upside, equities analysts clearly believe Red Rock Resorts is more favorable than Churchill Downs,.

Summary

Churchill Downs, beats Red Rock Resorts on 9 of the 16 factors compared between the two stocks.

Red Rock Resorts Company Profile

Red Rock Resorts, Inc. is a gaming, development and management company. The Company’s segments include Las Vegas operations, Native American management, and Corporate and other. The Las Vegas operations segment includes all of its Las Vegas area casino properties and the Native American management segment includes its Native American management arrangements. It provides gaming and entertainment for residents of the Las Vegas regional market and visitors. Its Las Vegas portfolio includes approximately 10 gaming and entertainment facilities and over 10 smaller casinos, offering approximately 20,300 slot machines, over 350 table games and approximately 4,750 hotel rooms. The Company offers a range of gaming and non-gaming entertainment options. It also controls over seven gaming-entitled development sites consisting of approximately 398 acres in Las Vegas and Reno, Nevada. The Company manages and owns interest in Station Casinos LLC, which is the provider of gaming and entertainment.

Churchill Downs, Company Profile

Churchill Downs Incorporated is a racing, gaming and online entertainment company. The Company is engaged in brick-and-mortar casino gaming with approximately 9,030 gaming positions in seven states, and is a legal mobile and online platform for betting on horseracing in the United States. It operates through six segments: Racing, Casinos, TwinSpires, Big Fish Games, Other Investments and Corporate. Racing includes four racetracks: Churchill Downs Racetrack, Arlington International Race Course, Fair Grounds Race Course and Calder Race Course. Casinos is a provider of brick-and-mortar real-money casino gaming. TwinSpires operates mobile and online wagering business, which is a platform for betting on horseracing. Big Fish Games, Inc. is a producer and distributor of social casino, casual and mid-core free-to-play and premium paid games for personal computer (PC), Mac and mobile devices. Other Investments includes United Tote and Capital View Casino & Resort Joint Venture (Capital View).

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