GameStop (NYSE:GME) & PENN Entertainment (NASDAQ:PENN) Critical Comparison

PENN Entertainment (NASDAQ:PENN) and GameStop (NYSE:GME) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.

Earnings and Valuation

This table compares PENN Entertainment and GameStop”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PENN Entertainment	$6.58 billion	0.25	-$311.50 million	($6.35)	-1.92
GameStop	$3.82 billion	2.77	$131.30 million	$0.82	28.82

GameStop has lower revenue, but higher earnings than PENN Entertainment. PENN Entertainment is trading at a lower price-to-earnings ratio than GameStop, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

91.7% of PENN Entertainment shares are owned by institutional investors. Comparatively, 29.2% of GameStop shares are owned by institutional investors. 2.7% of PENN Entertainment shares are owned by insiders. Comparatively, 8.6% of GameStop 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.

Analyst Ratings

This is a breakdown of current ratings for PENN Entertainment and GameStop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PENN Entertainment	2	6	9	0	2.41
GameStop	1	1	0	0	1.50

PENN Entertainment currently has a consensus price target of $19.67, suggesting a potential upside of 61.60%. GameStop has a consensus price target of $13.50, suggesting a potential downside of 42.87%. Given PENN Entertainment’s stronger consensus rating and higher possible upside, equities research analysts plainly believe PENN Entertainment is more favorable than GameStop.

Profitability

This table compares PENN Entertainment and GameStop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PENN Entertainment	-13.24%	-4.59%	-0.83%
GameStop	11.08%	9.75%	5.80%

Risk and Volatility

PENN Entertainment has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, GameStop has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500.

Summary

GameStop beats PENN Entertainment on 9 of the 14 factors compared between the two stocks.

About PENN Entertainment

PENN Entertainment, Inc., together with its subsidiaries, provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast, South, West, Midwest, and Interactive. It operates online sports betting in various jurisdictions; and iCasino under Hollywood Casino, L'Auberge, ESPN BET, and theScore Bet Sportsbook and Casino brands. The company's portfolio also includes PENN Play, customer loyalty program, which offers a set of rewards and experiences for business channels. In addition, it owns various trademarks and service marks, including Ameristar, Argosy, Boomtown, Hollywood Casino, Hollywood Gaming, L'Auberge, PENN Play, theScore, theScore Bet, theScore esports, and M Resort. The company was formerly known as Penn National Gaming, Inc. and changed its name to PENN Entertainment, Inc. in August 2022. PENN Entertainment, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania.

About GameStop

GameStop Corp., a specialty retailer, provides games and entertainment products through its stores and ecommerce platforms in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, and virtual reality products; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It sells collectibles comprising apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, as well as engages in the digital asset wallet and NFT marketplace activities. The company operates stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer magazine, a print and digital gaming publication. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.