Penn National Gaming (NASDAQ: PENN) and MGM Resorts International (NYSE:MGM) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitabiliy.

Analyst Ratings

This is a summary of recent ratings and target prices for Penn National Gaming and MGM Resorts International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penn National Gaming 0 3 7 0 2.70
MGM Resorts International 0 1 17 0 2.94

Penn National Gaming presently has a consensus price target of $20.22, indicating a potential downside of 1.36%. MGM Resorts International has a consensus price target of $34.71, indicating a potential upside of 2.01%. Given MGM Resorts International’s stronger consensus rating and higher probable upside, analysts clearly believe MGM Resorts International is more favorable than Penn National Gaming.

Profitability

This table compares Penn National Gaming and MGM Resorts International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Penn National Gaming 2.97% -19.08% 2.11%
MGM Resorts International 12.25% 7.76% 2.77%

Volatility and Risk

Penn National Gaming has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, MGM Resorts International has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.

Dividends

MGM Resorts International pays an annual dividend of $0.44 per share and has a dividend yield of 1.3%. Penn National Gaming does not pay a dividend. MGM Resorts International pays out 20.4% of its earnings in the form of a dividend.

Institutional and Insider Ownership

94.9% of Penn National Gaming shares are held by institutional investors. Comparatively, 73.7% of MGM Resorts International shares are held by institutional investors. 11.1% of Penn National Gaming shares are held by company insiders. Comparatively, 12.2% of MGM Resorts International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Penn National Gaming and MGM Resorts International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Penn National Gaming $3.03 billion 0.61 $822.61 million $0.99 20.71
MGM Resorts International $9.56 billion 2.05 $2.26 billion $2.16 15.75

MGM Resorts International has higher revenue and earnings than Penn National Gaming. MGM Resorts International is trading at a lower price-to-earnings ratio than Penn National Gaming, indicating that it is currently the more affordable of the two stocks.

Summary

MGM Resorts International beats Penn National Gaming on 14 of the 16 factors compared between the two stocks.

Penn National Gaming Company Profile

Penn National Gaming, Inc. (Penn) is an owner and manager of gaming and racing facilities, and video gaming terminal operations with a focus on slot machine entertainment. The Company operates through three segments: Northeast, South/West and Midwest. The Northeast segment consists of various properties, including Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course and Hollywood Casino Toledo. The South/West segment consists of various properties, such as Zia Park Casino, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, M Resort and Tropicana Las Vegas. The Midwest segment consists of various properties, Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside and Hollywood Casino Lawrenceburg. The Other category consists of the Company’s standalone racing operations, including Rosecroft Raceway and Sanford-Orlando Kennel Club.

MGM Resorts International Company Profile

MGM Resorts International is a holding company. The Company, through its subsidiaries, owns and operates casino resorts. The Company operates in two segments: domestic resorts and MGM China. Its domestic resorts segment consists of non-gaming operations, including hotel, food and beverage, entertainment and other non-gaming amenities. Its casino operations feature a range of slots, table games, and race and sports book wagering. Its MGM China‚Äôs operations consist of the MGM Macau resort and casino, and the development of an integrated casino, hotel and entertainment resort on the Cotai Strip in Macau. Under its resort operation, the Company’s casino resorts offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. It owns Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi, among others. It owns and manages CityCenter Holdings, LLC, located between Bellagio and Monte Carlo.

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