Eldorado Resorts (NASDAQ: ERI) and Red Rock Resorts (NASDAQ:RRR) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Insider & Institutional Ownership

69.4% of Eldorado Resorts shares are held by institutional investors. Comparatively, 62.5% of Red Rock Resorts shares are held by institutional investors. 1.2% of Eldorado Resorts shares are held by insiders. Comparatively, 40.9% of Red Rock Resorts shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Eldorado Resorts and Red Rock Resorts, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eldorado Resorts 0 0 2 0 3.00
Red Rock Resorts 0 2 8 0 2.80

Eldorado Resorts currently has a consensus price target of $25.00, suggesting a potential upside of 3.95%. Red Rock Resorts has a consensus price target of $26.28, suggesting a potential upside of 15.86%. Given Red Rock Resorts’ higher possible upside, analysts clearly believe Red Rock Resorts is more favorable than Eldorado Resorts.

Dividends

Red Rock Resorts pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Eldorado Resorts does not pay a dividend. Red Rock Resorts pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

Net Margins Return on Equity Return on Assets
Eldorado Resorts -3.38% -8.03% -1.78%
Red Rock Resorts 1.44% 14.05% 2.50%

Volatility and Risk

Eldorado Resorts has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Red Rock Resorts has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Eldorado Resorts N/A N/A N/A ($0.45) -53.44
Red Rock Resorts $1.56 billion 0.99 $497.16 million $0.48 47.25

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

Summary

Red Rock Resorts beats Eldorado Resorts on 9 of the 13 factors compared between the two stocks.

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).

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.

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