Head-To-Head Review: Pinnacle Entertainment (PNK) versus Monarch Casino & Resort (MCRI)

Monarch Casino & Resort (NASDAQ: MCRI) and Pinnacle Entertainment (NASDAQ:PNK) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitabiliy, valuation and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Monarch Casino & Resort and Pinnacle Entertainment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monarch Casino & Resort 0 2 2 0 2.50
Pinnacle Entertainment 0 3 3 0 2.50

Monarch Casino & Resort currently has a consensus price target of $47.00, indicating a potential upside of 54.91%. Pinnacle Entertainment has a consensus price target of $19.83, indicating a potential downside of 2.15%. Given Monarch Casino & Resort’s higher possible upside, research analysts clearly believe Monarch Casino & Resort is more favorable than Pinnacle Entertainment.

Risk and Volatility

Monarch Casino & Resort has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Pinnacle Entertainment has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Profitability

This table compares Monarch Casino & Resort and Pinnacle Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monarch Casino & Resort 11.27% 10.88% 8.57%
Pinnacle Entertainment -19.73% -415.78% -3.48%

Institutional and Insider Ownership

57.6% of Monarch Casino & Resort shares are owned by institutional investors. Comparatively, 88.4% of Pinnacle Entertainment shares are owned by institutional investors. 27.9% of Monarch Casino & Resort shares are owned by insiders. Comparatively, 8.3% of Pinnacle Entertainment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Monarch Casino & Resort and Pinnacle Entertainment’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Monarch Casino & Resort $220.70 million 2.41 $54.80 million $1.40 21.67
Pinnacle Entertainment $2.44 billion 0.48 $612.42 million ($7.93) -2.56

Pinnacle Entertainment has higher revenue and earnings than Monarch Casino & Resort. Pinnacle Entertainment is trading at a lower price-to-earnings ratio than Monarch Casino & Resort, indicating that it is currently the more affordable of the two stocks.

Summary

Monarch Casino & Resort beats Pinnacle Entertainment on 7 of the 12 factors compared between the two stocks.

About Monarch Casino & Resort

Monarch Casino & Resort, Inc. (Monarch), through its subsidiary, owns and operates the Atlantis Casino Resort Spa (the Atlantis), a hotel/casino facility in Reno, Nevada. The Company also owns and operates Monarch Casino Black Hawk. The Company’s segments include Atlantis and Monarch Casino Black Hawk. The Atlantis is located approximately three miles south of downtown in the area of Reno, Nevada. As of December 31, 2016, the Atlantis featured approximately 61,000 square feet of casino space; 824 guest rooms and suites; eight food outlets; two espresso and pastry bars; a 30,000 square foot health spa and salon with an enclosed year-round pool; two retail outlets offering clothing and traditional gift shop merchandise; an 8,000 square-foot family entertainment center, and approximately 52,000 square feet of banquet, convention and meeting room space.

About Pinnacle Entertainment

Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment businesses. The Company operates through three segments: Midwest, South and West. The Company’s Midwest segment includes Ameristar Council Bluffs, Ameristar East Chicago, Ameristar Kansas City, Ameristar St. Charles, Belterra, Belterra Park, Meadows and River City. The Company’s South segment includes Ameristar Vicksburg, Boomtown Bossier City, Boomtown New Orleans, L’Auberge Baton Rouge and L’Auberge Lake Charles. The Company’s West segment includes Ameristar Black Hawk and Cactus Petes and Horseshu. As of September 30, 2016, the Company owned and operated 16 gaming entertainment businesses, located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania. The Company’s gaming entertainment businesses include gaming, food and beverage, and retail facilities, which include hotel and resort amenities.

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