Analyzing Pinnacle Entertainment (PNK) and Golden Entertainment (GDEN)

Pinnacle Entertainment (NASDAQ: PNK) and Golden Entertainment (NASDAQ:GDEN) are both small-cap cyclical consumer goods & services companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Insider and Institutional Ownership

89.5% of Pinnacle Entertainment shares are owned by institutional investors. Comparatively, 27.5% of Golden Entertainment shares are owned by institutional investors. 8.3% of Pinnacle Entertainment shares are owned by company insiders. Comparatively, 52.0% of Golden Entertainment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Pinnacle Entertainment and Golden Entertainment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle Entertainment 0 3 3 0 2.50
Golden Entertainment 0 1 0 0 2.00

Pinnacle Entertainment presently has a consensus target price of $20.50, indicating a potential upside of 7.39%. Golden Entertainment has a consensus target price of $13.00, indicating a potential downside of 36.43%. Given Pinnacle Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe Pinnacle Entertainment is more favorable than Golden Entertainment.

Valuation and Earnings

This table compares Pinnacle Entertainment and Golden Entertainment’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pinnacle Entertainment $2.44 billion 0.45 $612.42 million $0.26 73.42
Golden Entertainment $426.75 million 1.07 $44.77 million $0.80 25.56

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

Profitability

This table compares Pinnacle Entertainment and Golden Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle Entertainment 1.29% N/A 0.85%
Golden Entertainment 4.29% 6.26% 3.17%

Risk & Volatility

Pinnacle Entertainment has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Golden Entertainment has a beta of 0.04, suggesting that its stock price is 96% less volatile than the S&P 500.

Summary

Pinnacle Entertainment beats Golden Entertainment on 8 of the 14 factors compared between the two stocks.

Pinnacle Entertainment Company Profile

Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment businesses. The Company operates through three segments: Midwest, South and West. The Company’s Midwest segment includes Ameristar Council Bluffs, Ameristar East Chicago, Ameristar Kansas City, Ameristar St. Charles, Belterra, Belterra Park, Meadows and River City. The Company’s South segment includes Ameristar Vicksburg, Boomtown Bossier City, Boomtown New Orleans, L’Auberge Baton Rouge and L’Auberge Lake Charles. The Company’s West segment includes Ameristar Black Hawk and Cactus Petes and Horseshu. As of September 30, 2016, the Company owned and operated 16 gaming entertainment businesses, located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania. The Company’s gaming entertainment businesses include gaming, food and beverage, and retail facilities, which include hotel and resort amenities.

Golden Entertainment Company Profile

Golden Entertainment, Inc. is a group of gaming companies. The Company focuses on distributed gaming, including tavern gaming, and casino and resort operations. It operates through two segments: Distributed Gaming and Casinos. Its Distributed Gaming segment involves the installation, maintenance and operation of gaming and amusement devices in certain strategic, high-traffic, non-casino locations (such as grocery stores, convenience stores, restaurants, bars, taverns, saloons and liquor stores) in Nevada and Montana, and the operation of traditional, branded taverns targeting local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. As of December 31, 2016, its distributed gaming operations consisted of approximately 10,400 gaming devices in approximately 960 locations. Its Casinos segment consists of the Rocky Gap Casino Resort in Flintstone, Maryland and three casinos in Pahrump, Nevada: Pahrump Nugget Hotel Casino, Gold Town Casino and Lakeside Casino & RV Park.

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