Critical Comparison: Bally’s (NYSE:BALY) & Darden Restaurants (NYSE:DRI)

Bally’s (NYSE:BALY) and Darden Restaurants (NYSE:DRI) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Profitability

This table compares Bally’s and Darden Restaurants’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bally’s	-25.83%	-40.97%	-7.66%
Darden Restaurants	8.85%	58.64%	9.56%

Valuation & Earnings

This table compares Bally’s and Darden Restaurants”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bally’s	$2.66 billion	0.23	-$701.10 million	($6.80)	-1.82
Darden Restaurants	$13.21 billion	1.93	$1.21 billion	$10.23	22.05

Darden Restaurants has higher revenue and earnings than Bally’s. Bally’s is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Bally’s has a beta of 1.83, meaning that its stock price is 83% more volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Insider and Institutional Ownership

70.4% of Bally’s shares are held by institutional investors. Comparatively, 93.6% of Darden Restaurants shares are held by institutional investors. 69.3% of Bally’s shares are held by company insiders. Comparatively, 0.7% of Darden Restaurants shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Bally’s and Darden Restaurants, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bally’s	2	3	0	0	1.60
Darden Restaurants	0	9	16	0	2.64

Bally’s presently has a consensus price target of $11.75, suggesting a potential downside of 5.01%. Darden Restaurants has a consensus price target of $232.82, suggesting a potential upside of 3.23%. Given Darden Restaurants’ stronger consensus rating and higher possible upside, analysts clearly believe Darden Restaurants is more favorable than Bally’s.

Summary

Darden Restaurants beats Bally’s on 12 of the 14 factors compared between the two stocks.

About Bally’s

Bally’s Corp. is a global casino-entertainment company with a portfolio of casinos and resorts and online gaming businesses. It operates through the following segments: Casinos & Resorts, International Interactive, and North America Interactive. The Casinos & Resorts segment consists of the company’s casino and resort properties, a horse racetrack, and a golf course. The International Interactive segment includes the European and Asian operations of Gamesys, a business-to-consumer iCasino operator. The North America Interactive segment covers a portfolio of sports betting, iGaming, and free-to-play gaming brands such as Bally’s Interactive, SportCaller, and Live at the Bike, and the North American operations of Gamesys. The company was founded on March 1, 2004 and is headquartered in Providence, RI.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.