Penn National Gaming (NASDAQ: PENN) and Ameristar Casinos (NASDAQ:ASCA) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Volatility and Risk

Penn National Gaming has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Ameristar Casinos has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500.

Earnings & Valuation

This table compares Penn National Gaming and Ameristar Casinos’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Penn National Gaming $3.03 billion 0.80 $109.31 million $8.72 3.06
Ameristar Casinos N/A N/A N/A $1.60 N/A

Penn National Gaming has higher revenue and earnings than Ameristar Casinos. Ameristar Casinos 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Penn National Gaming and Ameristar Casinos, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penn National Gaming 0 5 5 0 2.50
Ameristar Casinos 0 0 0 0 N/A

Penn National Gaming currently has a consensus price target of $21.40, indicating a potential downside of 19.70%.

Profitability

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

Net Margins Return on Equity Return on Assets
Penn National Gaming 26.16% -12.89% 1.38%
Ameristar Casinos N/A N/A N/A

Insider and Institutional Ownership

93.9% of Penn National Gaming shares are owned by institutional investors. 10.2% of Penn National Gaming shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Penn National Gaming beats Ameristar Casinos on 7 of the 9 factors compared between the two stocks.

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.

About Ameristar Casinos

Ameristar Casinos, Inc.(Ameristar), is a developer, owner and operator of casino entertainment facilities in local and regional markets. The Company has eight properties in seven markets. Its portfolio of casinos consists of: Ameristar Casino Resort Spa St. Charles (serving the St. Louis, Missouri metropolitan area); Ameristar Casino Hotel Kansas City (serving the Kansas City metropolitan area); Ameristar Casino Hotel Council Bluffs (serving Omaha, Nebraska and southwestern Iowa); Ameristar Casino Resort Spa Black Hawk (serving the Denver metropolitan area); Ameristar Casino Hotel Vicksburg (serving Jackson, Mississippi and Monroe, Louisiana); Ameristar Casino Hotel East Chicago (serving the Chicagoland area); and Cactus Petes Resort Casino and The Horseshu Hotel and Casino in Jackpot, Nevada (serving Idaho and the Pacific Northwest). In August 2013, Pinnacle Entertainment Inc completed the acquisition of Ameristar Casinos, Inc.

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