Penn National Gaming (PENN) versus Monarch Casino & Resort (MCRI) Critical Contrast

Monarch Casino & Resort (NASDAQ: MCRI) and Penn National Gaming (NASDAQ:PENN) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitabiliy, valuation, analyst recommendations, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent recommendations and price targets for Monarch Casino & Resort and Penn National Gaming, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monarch Casino & Resort 0 2 2 0 2.50
Penn National Gaming 0 3 7 0 2.70

Monarch Casino & Resort presently has a consensus target price of $47.00, suggesting a potential upside of 54.35%. Penn National Gaming has a consensus target price of $20.22, suggesting a potential downside of 4.34%. Given Monarch Casino & Resort’s higher probable upside, equities research analysts plainly believe Monarch Casino & Resort is more favorable than Penn National Gaming.

Profitability

This table compares Monarch Casino & Resort and Penn National Gaming’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%
Penn National Gaming 2.97% -19.08% 2.11%

Earnings & Valuation

This table compares Monarch Casino & Resort and Penn National Gaming’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Monarch Casino & Resort $220.70 million 2.42 $54.80 million $1.40 21.75
Penn National Gaming $3.03 billion 0.63 $822.61 million $0.99 21.35

Penn National Gaming has higher revenue and earnings than Monarch Casino & Resort. Penn National Gaming 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.

Institutional and Insider Ownership

57.5% of Monarch Casino & Resort shares are held by institutional investors. Comparatively, 94.6% of Penn National Gaming shares are held by institutional investors. 27.6% of Monarch Casino & Resort shares are held by insiders. Comparatively, 11.1% of Penn National Gaming shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Monarch Casino & Resort has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500. Comparatively, Penn National Gaming has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Summary

Monarch Casino & Resort beats Penn National Gaming on 9 of the 14 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 Penn National Gaming

Penn National Gaming, Inc. (Penn) is an owner and manager of gaming and racing facilities, and video gaming terminal operations with a focus on slot machine entertainment. The Company operates through three segments: Northeast, South/West and Midwest. The Northeast segment consists of various properties, including Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course and Hollywood Casino Toledo. The South/West segment consists of various properties, such as Zia Park Casino, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, M Resort and Tropicana Las Vegas. The Midwest segment consists of various properties, Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside and Hollywood Casino Lawrenceburg. The Other category consists of the Company’s standalone racing operations, including Rosecroft Raceway and Sanford-Orlando Kennel Club.

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