Contrasting DraftKings (NASDAQ:DKNG) and Electronic Arts (NASDAQ:EA)

Electronic Arts (NASDAQ:EA) and DraftKings (NASDAQ:DKNG) are both large-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Insider & Institutional Ownership

90.2% of Electronic Arts shares are held by institutional investors. Comparatively, 37.7% of DraftKings shares are held by institutional investors. 0.2% of Electronic Arts shares are held by insiders. Comparatively, 47.1% of DraftKings shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Electronic Arts and DraftKings, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Electronic Arts	1	19	4	0	2.13
DraftKings	1	7	23	0	2.71

Electronic Arts presently has a consensus target price of $186.95, suggesting a potential downside of 7.71%. DraftKings has a consensus target price of $45.79, suggesting a potential upside of 68.85%. Given DraftKings’ stronger consensus rating and higher possible upside, analysts clearly believe DraftKings is more favorable than Electronic Arts.

Profitability

This table compares Electronic Arts and DraftKings’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Electronic Arts	9.31%	23.53%	11.78%
DraftKings	-4.90%	-22.84%	-4.63%

Volatility & Risk

Electronic Arts has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, DraftKings has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500.

Earnings and Valuation

This table compares Electronic Arts and DraftKings”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Electronic Arts	$7.46 billion	6.79	$1.12 billion	$2.66	76.16
DraftKings	$4.77 billion	2.83	-$507.29 million	($0.57)	-47.58

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

Summary

Electronic Arts beats DraftKings on 9 of the 14 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 DraftKings

DraftKings Inc. operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators. In addition, it offers DraftKings marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions. The company is headquartered in Boston, Massachusetts.