Head-To-Head Comparison: Melco Crown Entertainment Limited (MLCO) & Churchill Downs, (CHDN)

Churchill Downs, (NASDAQ: CHDN) and Melco Crown Entertainment Limited (NASDAQ:MLCO) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, valuation, profitabiliy, institutional ownership, risk, analyst recommendations and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Churchill Downs, 8.66% 14.14% 4.33%
Melco Crown Entertainment Limited 5.23% 7.43% 2.99%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Churchill Downs, $1.30 billion 2.27 $298.80 million $6.67 27.17
Melco Crown Entertainment Limited $4.69 billion 2.44 $1.03 billion $0.51 45.96

Melco Crown Entertainment Limited has higher revenue and earnings than Churchill Downs,. Churchill Downs, 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.

Insider & Institutional Ownership

69.4% of Churchill Downs, shares are held by institutional investors. Comparatively, 39.3% of Melco Crown Entertainment Limited shares are held by institutional investors. 18.4% of Churchill Downs, shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for Churchill Downs, and Melco Crown Entertainment Limited, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Churchill Downs, 0 3 2 0 2.40
Melco Crown Entertainment Limited 1 7 10 0 2.50

Churchill Downs, presently has a consensus target price of $172.67, indicating a potential downside of 4.74%. Melco Crown Entertainment Limited has a consensus target price of $19.94, indicating a potential downside of 14.92%. Given Churchill Downs,’s higher probable upside, equities analysts clearly believe Churchill Downs, is more favorable than Melco Crown Entertainment Limited.

Risk and Volatility

Churchill Downs, has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, Melco Crown Entertainment Limited has a beta of 1.86, meaning that its stock price is 86% more volatile than the S&P 500.

Dividends

Churchill Downs, pays an annual dividend of $1.32 per share and has a dividend yield of 0.7%. Melco Crown Entertainment Limited pays an annual dividend of $0.23 per share and has a dividend yield of 1.0%. Churchill Downs, pays out 19.8% of its earnings in the form of a dividend. Melco Crown Entertainment Limited pays out 45.1% 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.

About Churchill Downs,

Churchill Downs Incorporated is a racing, gaming and online entertainment company. The Company is engaged in brick-and-mortar casino gaming with approximately 9,030 gaming positions in seven states, and is a legal mobile and online platform for betting on horseracing in the United States. It operates through six segments: Racing, Casinos, TwinSpires, Big Fish Games, Other Investments and Corporate. Racing includes four racetracks: Churchill Downs Racetrack, Arlington International Race Course, Fair Grounds Race Course and Calder Race Course. Casinos is a provider of brick-and-mortar real-money casino gaming. TwinSpires operates mobile and online wagering business, which is a platform for betting on horseracing. Big Fish Games, Inc. is a producer and distributor of social casino, casual and mid-core free-to-play and premium paid games for personal computer (PC), Mac and mobile devices. Other Investments includes United Tote and Capital View Casino & Resort Joint Venture (Capital View).

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.

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