Financial Review: Universal Entertainment (OTCMKTS:UETMF) & Red Rock Resorts (NASDAQ:RRR)

Universal Entertainment (OTCMKTS:UETMF) and Red Rock Resorts (NASDAQ:RRR) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, institutional ownership, earnings, profitability and valuation.

Volatility & Risk

Universal Entertainment has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Red Rock Resorts has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500.

Institutional and Insider Ownership

47.8% of Red Rock Resorts shares are held by institutional investors. 53.3% of Red Rock Resorts shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Universal Entertainment and Red Rock Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Universal Entertainment	-5.30%	14.42%	8.49%
Red Rock Resorts	9.52%	59.86%	4.80%

Valuation & Earnings

This table compares Universal Entertainment and Red Rock Resorts”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Universal Entertainment	$835.53 million	0.61	-$102.75 million	($0.59)	-11.11
Red Rock Resorts	$1.94 billion	3.42	$154.05 million	$3.14	19.96

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Universal Entertainment and Red Rock Resorts, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Universal Entertainment	0	0	0	0	0.00
Red Rock Resorts	0	4	9	1	2.79

Red Rock Resorts has a consensus target price of $64.42, suggesting a potential upside of 2.79%. Given Red Rock Resorts’ stronger consensus rating and higher probable upside, analysts clearly believe Red Rock Resorts is more favorable than Universal Entertainment.

Summary

Red Rock Resorts beats Universal Entertainment on 14 of the 15 factors compared between the two stocks.

About Universal Entertainment

Universal Entertainment Corporation, together with its subsidiaries, manufactures, develops, and sells pachislot and pachinko machines in Japan, Philippines, and internationally. The company operates in two segments, Amusement Equipment Business, and Integrated Resort Business. The company also develops and provides Falcon X, a peripheral system; Hot Stadium, a digital signage system; Universal Kingdom, a membership website for Android; and Slots Street, a social casino game; as well as operates OKADA MANILA, a casino resort in the Philippines. In addition, it operates casino, hotel, food and beverage, retail and leasing, entertainment, and real estate development businesses. The company was formerly known as Aruze Corp. and changed its name to Universal Entertainment Corporation in November 2009. Universal Entertainment Corporation was founded in 1969 and is headquartered in Tokyo, Japan.

About Red Rock Resorts

Red Rock Resorts, Inc., through its interest in Station Casinos LLC, develops and operates casino and entertainment properties in the United States. The company owns and operates gaming and entertainment facilities, including Durango Casino & Resort and smaller casinos in the Las Vegas regional market. The company was formerly known as Station Casinos Corp. and changed its name to Red Rock Resorts, Inc. in January 2016. Red Rock Resorts, Inc. was founded in 1976 and is based in Las Vegas, Nevada.