Critical Analysis: Churchill Downs (NASDAQ:CHDN) & Brightstar Lottery (NYSE:BRSL)

Churchill Downs (NASDAQ:CHDN) and Brightstar Lottery (NYSE:BRSL) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Valuation & Earnings

This table compares Churchill Downs and Brightstar Lottery”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Churchill Downs	$2.93 billion	2.00	$383.00 million	$5.83	14.43
Brightstar Lottery	$2.51 billion	0.83	$147.00 million	$1.30	8.55

Churchill Downs has higher revenue and earnings than Brightstar Lottery. Brightstar Lottery is trading at a lower price-to-earnings ratio than Churchill Downs, indicating that it is currently the more affordable of the two stocks.

Dividends

Churchill Downs pays an annual dividend of $0.44 per share and has a dividend yield of 0.5%. Brightstar Lottery pays an annual dividend of $0.92 per share and has a dividend yield of 8.3%. Churchill Downs pays out 7.5% of its earnings in the form of a dividend. Brightstar Lottery pays out 70.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Churchill Downs has increased its dividend for 14 consecutive years.

Institutional & Insider Ownership

82.6% of Churchill Downs shares are owned by institutional investors. Comparatively, 44.3% of Brightstar Lottery shares are owned by institutional investors. 5.9% of Churchill Downs shares are owned by insiders. Comparatively, 1.2% of Brightstar Lottery shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Churchill Downs and Brightstar Lottery’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Churchill Downs	13.82%	42.16%	6.31%
Brightstar Lottery	10.05%	10.47%	2.06%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Churchill Downs and Brightstar Lottery, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Churchill Downs	0	1	10	0	2.91
Brightstar Lottery	1	4	4	0	2.33

Churchill Downs presently has a consensus price target of $134.89, suggesting a potential upside of 60.33%. Brightstar Lottery has a consensus price target of $15.10, suggesting a potential upside of 35.85%. Given Churchill Downs’ stronger consensus rating and higher probable upside, analysts plainly believe Churchill Downs is more favorable than Brightstar Lottery.

Volatility and Risk

Churchill Downs has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Brightstar Lottery has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.

Summary

Churchill Downs beats Brightstar Lottery on 15 of the 17 factors compared between the two stocks.

About Churchill Downs

Churchill Downs Incorporated operates as a racing, online wagering, and gaming entertainment company in the United States. It operates through three segments: Live and Historical Racing, TwinSpires, and Gaming. The company operates pari-mutuel gaming entertainment venues; TwinSpires, an online wagering platform for horse racing, sports, and iGaming; retail sports books; casino gaming; and Terre Haute Casino Resort. It also offers streaming video of live horse races, replays, and an assortment of racing and handicapping information; and provides the Bloodstock Research Information Services platform for horse racing statistical data. In addition, the company manufactures and operates pari-mutuel wagering systems for racetracks, off-track betting facilities, and other pari-mutuel wagering businesses. Churchill Downs Incorporated was founded in 1875 and is headquartered in Louisville, Kentucky.

About Brightstar Lottery

International Game Technology PLC operates and provides gaming technology products and services in North America, Europe, the Middle East, Africa, Asia-Pacific, Latin America, and the Caribbean. It operates in three segments: Global Lottery, Global Gaming, and Digital & Betting. The company designs, sells, operates, and leases a suite of point-of-sale machines that reconciles lottery funds between the retailer and lottery authority; provides online lottery transaction processing systems; produces instant ticket games; and offers printing services, such as instant ticket marketing plans and graphic design, programming, packaging, shipping, and delivery services. It also designs, develops, assembles, and provides cabinets, games, systems, and software for the gaming market, as well as offers gaming management systems for casino management, customer relationship management, patron management, and server-based gaming. In addition, the company provides video lottery terminals (VLT), VLT central systems, and VLT games. Further, it offers digital gaming and betting; sports betting; and technology and management services. Additionally, the company provides digital gaming products and services, including blackjack, roulette, slot games, poker, bingo, and other casino card games; social casino content; and remote game server, as well as iGaming systems and digital platforms that offer player account management, advanced marketing and analytical, and payment system services. It processes commercial transactions, such as prepaid cellular telephone recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, prepaid card recharges, and stamp duty and money transfer services. The company was formerly known as GTECH S.p.A. and changed its name to International Game Technology PLC in April 2015. The company was founded in 2014 and is headquartered in London, the United Kingdom. International Game Technology PLC is a subsidiary of De Agostini S.p.A.