Melco Crown Entertainment Limited (NASDAQ: MLCO) and Pinnacle Entertainment (NASDAQ:PNK) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitabiliy, institutional ownership, analyst recommendations, valuation and risk.

Risk & Volatility

Melco Crown Entertainment Limited has a beta of 1.91, suggesting that its share price is 91% more volatile than the S&P 500. Comparatively, Pinnacle Entertainment has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.

Insider & Institutional Ownership

40.1% of Melco Crown Entertainment Limited shares are owned by institutional investors. Comparatively, 89.5% of Pinnacle Entertainment shares are owned by institutional investors. 8.3% of Pinnacle Entertainment shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Melco Crown Entertainment Limited pays an annual dividend of $0.32 per share and has a dividend yield of 1.6%. Pinnacle Entertainment does not pay a dividend. Melco Crown Entertainment Limited pays out 61.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Melco Crown Entertainment Limited and Pinnacle Entertainment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Melco Crown Entertainment Limited 1 6 9 0 2.50
Pinnacle Entertainment 0 3 3 0 2.50

Melco Crown Entertainment Limited presently has a consensus target price of $20.48, indicating a potential upside of 1.19%. Pinnacle Entertainment has a consensus target price of $19.83, indicating a potential upside of 1.87%. Given Pinnacle Entertainment’s higher possible upside, analysts clearly believe Pinnacle Entertainment is more favorable than Melco Crown Entertainment Limited.

Profitability

This table compares Melco Crown Entertainment Limited and Pinnacle Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Melco Crown Entertainment Limited 5.11% 9.20% 3.59%
Pinnacle Entertainment -19.73% N/A -3.48%

Earnings and Valuation

This table compares Melco Crown Entertainment Limited and Pinnacle Entertainment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Melco Crown Entertainment Limited $4.92 billion 2.01 $1.11 billion $0.52 38.92
Pinnacle Entertainment $2.44 billion 0.46 $612.42 million ($7.93) -2.46

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

Summary

Melco Crown Entertainment Limited beats Pinnacle Entertainment on 10 of the 14 factors compared between the two stocks.

About Melco Crown Entertainment Limited

Melco Resorts & Entertainment Limited, formerly Melco Crown Entertainment Limited, is a holding company. The Company, through its subsidiaries, develops, owns and operates casino gaming and entertainment casino resort facilities in Asia. It is principally engaged in the gaming and hospitality business in Asia and its principal operating and developmental activities occur in over two geographic areas, which include Macau and the Philippines. Its segments include City of Dreams, Altira Macau, Studio City, Mocha Clubs, City of Dreams Manila, and Corporate and Others. It has over three casino based operations in Macau, namely, City of Dreams, Altira Macau and Studio City, and non-casino based operations in Macau at its Mocha Clubs. It also has a casino based operation in the Philippines, City of Dreams Manila. It is developing the fifth hotel tower at City of Dreams in Cotai, Macau. Its other operations also include Taipa Square Casino, Macau operating within Hotel Taipa Square.

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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