Reviewing PENN Entertainment (NASDAQ:PENN) & Take-Two Interactive Software (NASDAQ:TTWO)

Take-Two Interactive Software (NASDAQ:TTWO) and PENN Entertainment (NASDAQ:PENN) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Profitability

This table compares Take-Two Interactive Software and PENN Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Take-Two Interactive Software	-4.48%	14.68%	5.22%
PENN Entertainment	-13.55%	0.44%	0.07%

Risk & Volatility

Take-Two Interactive Software has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, PENN Entertainment has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Insider & Institutional Ownership

95.5% of Take-Two Interactive Software shares are owned by institutional investors. Comparatively, 91.7% of PENN Entertainment shares are owned by institutional investors. 1.3% of Take-Two Interactive Software shares are owned by company insiders. Comparatively, 3.2% of PENN Entertainment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Take-Two Interactive Software and PENN Entertainment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Take-Two Interactive Software	1	1	17	1	2.90
PENN Entertainment	1	6	10	0	2.53

Take-Two Interactive Software presently has a consensus target price of $292.88, suggesting a potential upside of 14.86%. PENN Entertainment has a consensus target price of $21.75, suggesting a potential downside of 1.18%. Given Take-Two Interactive Software’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Take-Two Interactive Software is more favorable than PENN Entertainment.

Earnings & Valuation

This table compares Take-Two Interactive Software and PENN Entertainment”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Take-Two Interactive Software	$6.66 billion	7.11	-$298.20 million	($1.62)	-157.40
PENN Entertainment	$6.96 billion	0.42	-$843.10 million	($6.72)	-3.28

Take-Two Interactive Software has higher earnings, but lower revenue than PENN Entertainment. Take-Two Interactive Software is trading at a lower price-to-earnings ratio than PENN Entertainment, indicating that it is currently the more affordable of the two stocks.

Summary

Take-Two Interactive Software beats PENN Entertainment on 11 of the 15 factors compared between the two stocks.

About Take-Two Interactive Software

Take-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers worldwide. It develops and publishes action/adventure products under the Grand Theft Auto, LA Noire, Max Payne, Midnight Club, and Red Dead Redemption names, as well as other franchises. The company also publishes various entertainment properties across various platforms and a range of genres, such as shooter, action, role-playing, strategy, sports, and family/casual entertainment under the BioShock, Mafia, Sid Meier’s Civilization, XCOM series, Borderlands, and Tiny Tina’s Wonderland names. In addition, it publishes sports simulation titles comprising NBA 2K series, a basketball video game; the WWE 2K professional wrestling series; mobile titles, including WWE SuperCard; and PGA TOUR 2K. Further, the company offers Kerbal Space Program and OlliOlli World; free-to-play mobile games, such as CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Golf Rival, Harry Potter: Puzzles & Spells, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Toon Blast, Top Eleven, Top Troops, Toy Blast, Two Dots, Words With Friends, and Zynga Poker; and hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D, Power Slap, Pull the Pin, Twisted Tangle, and Tangled Snakes. Its products are designed for console gaming systems; personal computers; and mobiles comprising smartphones and tablets. The company provides its products through physical retail, digital download, online platforms, and cloud streaming services. Take-Two Interactive Software, Inc. was incorporated in 1993 and is based in New York, New York.

About PENN Entertainment

PENN Entertainment, Inc., together with its subsidiaries, provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast, South, West, Midwest, and Interactive. It operates online sports betting in various jurisdictions; and iCasino under Hollywood Casino, L'Auberge, ESPN BET, and theScore Bet Sportsbook and Casino brands. The company's portfolio also includes PENN Play, customer loyalty program, which offers a set of rewards and experiences for business channels. In addition, it owns various trademarks and service marks, including Ameristar, Argosy, Boomtown, Hollywood Casino, Hollywood Gaming, L'Auberge, PENN Play, theScore, theScore Bet, theScore esports, and M Resort. The company was formerly known as Penn National Gaming, Inc. and changed its name to PENN Entertainment, Inc. in August 2022. PENN Entertainment, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania.