Electronic Arts (NASDAQ:EA – Get Free Report) and PENN Entertainment (NASDAQ:PENN – Get Free Report) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.
Volatility & Risk
Electronic Arts has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, PENN Entertainment has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500.
Valuation and Earnings
This table compares Electronic Arts and PENN Entertainment”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Electronic Arts | $7.29 billion | 6.89 | $1.12 billion | $3.42 | 58.86 |
| PENN Entertainment | $6.82 billion | 0.28 | -$311.50 million | ($6.35) | -2.28 |
Electronic Arts has higher revenue and earnings than PENN Entertainment. PENN Entertainment is trading at a lower price-to-earnings ratio than Electronic Arts, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Electronic Arts and PENN Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Electronic Arts | 12.14% | 15.30% | 8.02% |
| PENN Entertainment | -1.12% | -4.36% | -0.85% |
Analyst Ratings
This is a breakdown of current ratings and target prices for Electronic Arts and PENN Entertainment, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Electronic Arts | 1 | 25 | 4 | 2 | 2.22 |
| PENN Entertainment | 2 | 6 | 10 | 0 | 2.44 |
Electronic Arts currently has a consensus price target of $181.64, suggesting a potential downside of 9.77%. PENN Entertainment has a consensus price target of $22.60, suggesting a potential upside of 56.13%. Given PENN Entertainment’s stronger consensus rating and higher possible upside, analysts clearly believe PENN Entertainment is more favorable than Electronic Arts.
Insider & Institutional Ownership
90.2% of Electronic Arts shares are owned by institutional investors. Comparatively, 91.7% of PENN Entertainment shares are owned by institutional investors. 0.2% of Electronic Arts shares are owned by insiders. Comparatively, 2.7% of PENN Entertainment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Electronic Arts beats PENN Entertainment on 9 of the 15 factors compared between the two stocks.
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.
About PENN Entertainment
PENN Entertainment, Inc., together with its subsidiaries, provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast, South, West, Midwest, and Interactive. It operates online sports betting in various jurisdictions; and iCasino under Hollywood Casino, L'Auberge, ESPN BET, and theScore Bet Sportsbook and Casino brands. The company's portfolio also includes PENN Play, customer loyalty program, which offers a set of rewards and experiences for business channels. In addition, it owns various trademarks and service marks, including Ameristar, Argosy, Boomtown, Hollywood Casino, Hollywood Gaming, L'Auberge, PENN Play, theScore, theScore Bet, theScore esports, and M Resort. The company was formerly known as Penn National Gaming, Inc. and changed its name to PENN Entertainment, Inc. in August 2022. PENN Entertainment, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania.
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