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

Earnings & Valuation

This table compares Red Rock Resorts and Eldorado Resorts’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Rock Resorts $1.56 billion 0.93 $495.60 million $0.48 45.85
Eldorado Resorts N/A N/A N/A ($0.45) -51.78

Red Rock Resorts has higher revenue and earnings than Eldorado Resorts. Eldorado Resorts 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Red Rock Resorts 1.44% 14.05% 2.50%
Eldorado Resorts -3.38% -11.56% -2.46%

Institutional and Insider Ownership

59.5% of Red Rock Resorts shares are owned by institutional investors. Comparatively, 65.2% of Eldorado Resorts shares are owned by institutional investors. 40.9% of Red Rock Resorts shares are owned by company insiders. Comparatively, 1.1% of Eldorado Resorts shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Red Rock Resorts pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Eldorado Resorts does not pay a dividend. Red Rock Resorts pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations for Red Rock Resorts and Eldorado Resorts, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Rock Resorts 0 2 10 0 2.83
Eldorado Resorts 0 0 3 0 3.00

Red Rock Resorts currently has a consensus price target of $26.15, suggesting a potential upside of 18.81%. Eldorado Resorts has a consensus price target of $22.33, suggesting a potential downside of 4.15%. Given Red Rock Resorts’ higher probable upside, analysts plainly believe Red Rock Resorts is more favorable than Eldorado Resorts.

Volatility & Risk

Red Rock Resorts has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Eldorado Resorts has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Summary

Red Rock Resorts beats Eldorado Resorts on 9 of the 13 factors compared between the two stocks.

About Red Rock Resorts

Red Rock Resorts, Inc. is a gaming, development and management company. The Company’s segments include Las Vegas operations, Native American management, and Corporate and other. The Las Vegas operations segment includes all of its Las Vegas area casino properties and the Native American management segment includes its Native American management arrangements. It provides gaming and entertainment for residents of the Las Vegas regional market and visitors. Its Las Vegas portfolio includes approximately 10 gaming and entertainment facilities and over 10 smaller casinos, offering approximately 20,300 slot machines, over 350 table games and approximately 4,750 hotel rooms. The Company offers a range of gaming and non-gaming entertainment options. It also controls over seven gaming-entitled development sites consisting of approximately 398 acres in Las Vegas and Reno, Nevada. The Company manages and owns interest in Station Casinos LLC, which is the provider of gaming and entertainment.

About Eldorado Resorts

Eldorado Resorts, Inc. is a gaming and hospitality company that owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia. The Company’s segments are Nevada, Louisiana, Eastern and Corporate. As of May 1, 2017, the Company owned and operated approximately 503,000 square feet of casino space with approximately 20,000 slot machines and video lottery terminals (VLTs), over 550 table and poker games, 45 restaurants and 6,500 hotel rooms. As of December 31, 2016, the Company owned and operated various properties, including Eldorado Resort Casino Reno (Eldorado Reno), Silver Legacy Resort Casino (Silver Legacy), Circus Circus Reno (Circus Reno), Eldorado Resort Casino Shreveport (Eldorado Shreveport), Mountaineer Casino, Racetrack & Resort (Mountaineer), Presque Isle Downs & Casino (Presque Isle Downs), and Eldorado Gaming Scioto Downs (Scioto Downs).

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