Critical Survey: Gaming and Leisure Properties (GLPI) vs. MGM Growth Properties (MGP)

Gaming and Leisure Properties (NASDAQ: GLPI) and MGM Growth Properties (NYSE:MGP) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Profitability

This table compares Gaming and Leisure Properties and MGM Growth Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gaming and Leisure Properties 39.31% 17.37% 5.83%
MGM Growth Properties 6.18% 0.81% 0.48%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Gaming and Leisure Properties and MGM Growth Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gaming and Leisure Properties 0 2 4 0 2.67
MGM Growth Properties 0 2 4 0 2.67

Gaming and Leisure Properties currently has a consensus price target of $40.20, indicating a potential upside of 14.56%. MGM Growth Properties has a consensus price target of $32.33, indicating a potential upside of 21.19%. Given MGM Growth Properties’ higher possible upside, analysts clearly believe MGM Growth Properties is more favorable than Gaming and Leisure Properties.

Dividends

Gaming and Leisure Properties pays an annual dividend of $2.52 per share and has a dividend yield of 7.2%. MGM Growth Properties pays an annual dividend of $1.68 per share and has a dividend yield of 6.3%. Gaming and Leisure Properties pays out 140.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGM Growth Properties pays out 218.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gaming and Leisure Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Gaming and Leisure Properties has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500. Comparatively, MGM Growth Properties has a beta of -1.41, suggesting that its share price is 241% less volatile than the S&P 500.

Earnings & Valuation

This table compares Gaming and Leisure Properties and MGM Growth Properties’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gaming and Leisure Properties $828.26 million 9.01 $289.30 million $1.80 19.49
MGM Growth Properties $467.55 million 4.05 $29.93 million $0.77 34.65

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

Insider and Institutional Ownership

92.3% of Gaming and Leisure Properties shares are held by institutional investors. 5.9% of Gaming and Leisure Properties shares are held by company insiders. Comparatively, 0.6% of MGM Growth Properties shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Gaming and Leisure Properties beats MGM Growth Properties on 12 of the 14 factors compared between the two stocks.

About Gaming and Leisure Properties

Gaming and Leisure Properties, Inc. (GLPI) is a self-administered and self-managed Pennsylvania real estate investment trust (REIT). The Company is engaged in the business of acquiring, financing and owning real estate property to be leased to gaming operators in triple net lease arrangements. Its segments include GLP Capital, L.P. (GLP Capital), through which the Company owns all of its real estate assets, and the TRS Properties, which consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. The GLP Capital segment consists of the leased real property. As of December 31, 2016, the Company had 34 rental properties, consisting of the real property associated with 18 gaming and related facilities operated by Penn National Gaming, Inc. (Penn), the real property associated with 15 gaming and related facilities operated by Pinnacle Entertainment, Inc. (Pinnacle), and the real property associated with the Casino Queen in East St. Louis, Illinois.

About MGM Growth Properties

MGM Growth Properties LLC is a real estate investment trust engaged in the acquisition, ownership and leasing of destination entertainment and leisure resorts, whose amenities include casino gaming, hotel, convention, dining, entertainment and retail offerings. Its portfolio consists of approximately 10 destination resorts. It has over six entertainment and gaming-related properties located on the Las Vegas Strip, including Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor and Excalibur, and The Park, a dining and entertainment complex located between New York-New York and Monte Carlo. Outside of Las Vegas, it owns over four casino resort properties, including MGM Grand Detroit in Detroit, Michigan, Borgata Hotel Casino & Spa in Atlantic City, New Jersey, and Beau Rivage and Gold Strike Tunica, both of which are located in Mississippi. It operates approximately 27,330 hotel rooms, over 200 restaurants, approximately 100 retail outlets and over 20 entertainment venues.

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