Red Rock Resorts (NASDAQ:RRR) and Electronic Arts (NASDAQ:EA) Head-To-Head Contrast

Red Rock Resorts (NASDAQ:RRR) and Electronic Arts (NASDAQ:EA) are both consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Dividends

Red Rock Resorts pays an annual dividend of $1.04 per share and has a dividend yield of 2.0%. Electronic Arts pays an annual dividend of $0.76 per share and has a dividend yield of 0.4%. Red Rock Resorts pays out 33.4% of its earnings in the form of a dividend. Electronic Arts pays out 21.8% 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.

Volatility and Risk

Red Rock Resorts has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, Electronic Arts has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Insider and Institutional Ownership

47.8% of Red Rock Resorts shares are held by institutional investors. Comparatively, 90.2% of Electronic Arts shares are held by institutional investors. 53.3% of Red Rock Resorts shares are held by company insiders. Comparatively, 0.2% of Electronic Arts shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Red Rock Resorts and Electronic Arts, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Red Rock Resorts	1	3	12	0	2.69
Electronic Arts	1	16	3	0	2.10

Red Rock Resorts currently has a consensus target price of $67.67, indicating a potential upside of 29.83%. Electronic Arts has a consensus target price of $196.64, indicating a potential downside of 2.19%. Given Red Rock Resorts’ stronger consensus rating and higher possible upside, equities analysts plainly believe Red Rock Resorts is more favorable than Electronic Arts.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Red Rock Resorts	9.21%	61.67%	4.51%
Electronic Arts	11.78%	23.41%	11.71%

Earnings & Valuation

This table compares Red Rock Resorts and Electronic Arts”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Red Rock Resorts	$2.01 billion	2.72	$188.07 million	$3.11	16.76
Electronic Arts	$7.53 billion	6.69	$887.00 million	$3.49	57.61

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

Summary

Electronic Arts beats Red Rock Resorts on 9 of the 16 factors compared between the two stocks.

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.

About Electronic Arts

Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide. It develops and publishes games and services across various genres, such as sports, racing, first-person shooter, action, role-playing, and simulation primarily under the Battlefield, The Sims, Apex Legends, Need for Speed, and license games from others, including FIFA, Madden NFL, UFC, and Star Wars brands. The company licenses its games to third parties to distribute and host its games. It markets and sells its games and services through digital distribution and retail channels, as well as directly to mass market retailers, specialty stores, and distribution arrangements. Electronic Arts Inc. was incorporated in 1982 and is headquartered in Redwood City, California.