Critical Review: Las Vegas Sands (NYSE:LVS) & Electronic Arts (NASDAQ:EA)

Electronic Arts (NASDAQ:EA) and Las Vegas Sands (NYSE:LVS) are both large-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Dividends

Electronic Arts pays an annual dividend of $0.76 per share and has a dividend yield of 0.4%. Las Vegas Sands pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Electronic Arts pays out 22.2% of its earnings in the form of a dividend. Las Vegas Sands pays out 45.2% 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. Las Vegas Sands has increased its dividend for 2 consecutive years. Las Vegas Sands is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

90.2% of Electronic Arts shares are owned by institutional investors. Comparatively, 39.2% of Las Vegas Sands shares are owned by institutional investors. 0.2% of Electronic Arts shares are owned by company insiders. Comparatively, 1.2% of Las Vegas Sands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Electronic Arts has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, Las Vegas Sands has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Electronic Arts and Las Vegas Sands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Electronic Arts	1	25	4	0	2.10
Las Vegas Sands	0	6	11	1	2.72

Electronic Arts currently has a consensus price target of $182.17, indicating a potential downside of 10.70%. Las Vegas Sands has a consensus price target of $69.05, indicating a potential upside of 18.03%. Given Las Vegas Sands’ stronger consensus rating and higher possible upside, analysts plainly believe Las Vegas Sands is more favorable than Electronic Arts.

Valuation & Earnings

This table compares Electronic Arts and Las Vegas Sands”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Electronic Arts	$7.46 billion	6.84	$1.12 billion	$3.42	59.65
Las Vegas Sands	$11.30 billion	3.50	$1.45 billion	$2.21	26.47

Las Vegas Sands has higher revenue and earnings than Electronic Arts. Las Vegas Sands is trading at a lower price-to-earnings ratio than Electronic Arts, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Electronic Arts and Las Vegas Sands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Electronic Arts	12.14%	15.30%	8.02%
Las Vegas Sands	12.69%	73.14%	8.87%

Summary

Las Vegas Sands beats Electronic Arts on 13 of the 18 factors compared between the two stocks.

About Electronic Arts

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games. It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements. Electronic Arts Inc. was incorporated in 1982 and is headquartered in Redwood City, California.

About Las Vegas Sands

Las Vegas Sands Corp., together with its subsidiaries, develops, owns, and operates integrated resorts in Macao and Singapore. It owns and operates The Venetian Macao Resort Hotel, the Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, Cotai Strip, and the Sands Macao in Macao, the People’s Republic of China; and Marina Bay Sands in Singapore. The company’s integrated resorts feature accommodations, gaming, entertainment and retail malls, convention and exhibition facilities, celebrity chef restaurants, and other amenities. Las Vegas Sands Corp. was founded in 1988 and is based in Las Vegas, Nevada.