Analyzing Penn National Gaming (NASDAQ:PENN) and Bally’s (NYSE:BALY)

Penn National Gaming (NASDAQ:PENN) and Bally’s (NYSE:BALY) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Valuation and Earnings

This table compares Penn National Gaming and Bally’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Penn National Gaming $5.30 billion 2.53 $43.90 million $0.37 233.43
Bally’s $523.58 million 2.92 $55.13 million $1.81 27.75

Bally’s has lower revenue, but higher earnings than Penn National Gaming. Bally’s is trading at a lower price-to-earnings ratio than Penn National Gaming, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Penn National Gaming and Bally’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Penn National Gaming -21.16% -15.63% -1.80%
Bally’s -3.21% -1.12% -0.16%

Volatility and Risk

Penn National Gaming has a beta of 2.59, indicating that its stock price is 159% more volatile than the S&P 500. Comparatively, Bally’s has a beta of 2.72, indicating that its stock price is 172% more volatile than the S&P 500.

Insider and Institutional Ownership

87.8% of Penn National Gaming shares are owned by institutional investors. Comparatively, 1.5% of Bally’s shares are owned by institutional investors. 1.8% of Penn National Gaming shares are owned by company insiders. Comparatively, 41.7% of Bally’s shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Penn National Gaming and Bally’s, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penn National Gaming 2 4 11 0 2.53
Bally’s 0 1 1 0 2.50

Penn National Gaming presently has a consensus target price of $67.74, suggesting a potential downside of 21.57%. Bally’s has a consensus target price of $55.67, suggesting a potential upside of 10.82%. Given Bally’s’ higher possible upside, analysts clearly believe Bally’s is more favorable than Penn National Gaming.

Summary

Bally’s beats Penn National Gaming on 9 of the 14 factors compared between the two stocks.

Penn National Gaming Company Profile

Penn National Gaming, Inc., together with its subsidiaries, owns and manages gaming and racing properties, and operates video gaming terminals with a focus on slot machine entertainment. The company operates through four segments: Northeast, South, West, and Midwest. It also offers live sports betting at its properties in Indiana, Iowa, Mississippi, Nevada, Pennsylvania, and West Virginia; and operates online casino under the name of iCasino in Pennsylvania. As of March 16, 2020, the company owned, managed, or had ownership interests in 41 gaming and racing properties in 19 jurisdictions. It owns various trademarks and service marks, including, Ameristar, Argosy, Boomtown, Greektown, Hollywood Casino, Hollywood Gaming, Hollywood Poker, L'Auberge, M Resort, and MYCHOICE. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania.

Bally’s Company Profile

Bally's Corporation owns and operates gaming and racing facilities in the United States. Its gaming and racing facilities include slot machines and various casino table games, and restaurant and hotel facilities. The company owns and manages Twin River Casino Hotel in Lincoln, Rhode Island; Tiverton Casino Hotel in Tiverton, Rhode Island; Hard Rock Hotel & Casino in Biloxi, Mississippi; Casino Vicksburg in Vicksburg, Mississippi; Dover Downs Hotel & Casino in Dover, Delaware; Casino KC in Kansas City, Missouri; Golden Gates, Golden Gulch, and Mardi Gras casinos in Black Hawk, Colorado; and Arapahoe Park racetrack and 13 off-track betting licenses in Aurora, Colorado. As of September 30, 2020, it owned and operated nine casinos that comprise 10,359 slot machines, 300 gaming tables, 54 stadium gaming positions, 49 dining establishments, 26 bars, 1,290 hotel rooms, and 4 entertainment venues, as well as a horse racetrack. The company was formerly known as Twin River Worldwide Holdings, Inc. and changed its name to Bally's Corporation in November 2020. Bally's Corporation was founded in 2004 and is headquartered in Providence, Rhode Island.

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