Red Rock Resorts (NASDAQ: RRR) and Pinnacle Entertainment (NASDAQ:PNK) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, dividends, profitabiliy, valuation, analyst recommendations and institutional ownership.
Dividends
Red Rock Resorts pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Pinnacle Entertainment does not pay a dividend. Red Rock Resorts pays out 45.5% of its earnings in the form of a dividend.
Analyst Ratings
This is a summary of current recommendations for Red Rock Resorts and Pinnacle Entertainment, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Red Rock Resorts | 0 | 2 | 10 | 0 | 2.83 |
| Pinnacle Entertainment | 0 | 3 | 3 | 0 | 2.50 |
Red Rock Resorts presently has a consensus price target of $26.15, indicating a potential upside of 6.69%. Pinnacle Entertainment has a consensus price target of $19.83, indicating a potential upside of 1.55%. Given Red Rock Resorts’ stronger consensus rating and higher possible upside, equities analysts plainly believe Red Rock Resorts is more favorable than Pinnacle Entertainment.
Risk and Volatility
Red Rock Resorts has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, Pinnacle Entertainment has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.
Insider & Institutional Ownership
58.4% of Red Rock Resorts shares are owned by institutional investors. Comparatively, 88.6% of Pinnacle Entertainment shares are owned by institutional investors. 40.9% of Red Rock Resorts shares are owned by insiders. Comparatively, 8.3% of Pinnacle Entertainment shares are owned by 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.
Profitability
This table compares Red Rock Resorts and Pinnacle Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Red Rock Resorts | 3.58% | 10.00% | 1.83% |
| Pinnacle Entertainment | -19.73% | N/A | -3.48% |
Valuation & Earnings
This table compares Red Rock Resorts and Pinnacle Entertainment’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Red Rock Resorts | $1.51 billion | 1.07 | $493.64 million | $0.88 | 27.85 |
| Pinnacle Entertainment | $2.44 billion | 0.46 | $612.42 million | ($7.93) | -2.46 |
Pinnacle Entertainment has higher revenue and earnings than Red Rock Resorts. Pinnacle 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.
Summary
Red Rock Resorts beats Pinnacle Entertainment on 10 of the 15 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 Pinnacle Entertainment
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.
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