GameStop (NYSE:GME) versus Accel Entertainment (NYSE:ACEL) Critical Review

Accel Entertainment (NYSE:ACEL) and GameStop (NYSE:GME) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, risk, earnings, valuation, institutional ownership and dividends.

Earnings & Valuation

This table compares Accel Entertainment and GameStop”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Accel Entertainment	$1.23 billion	0.68	$35.25 million	$0.40	24.94
GameStop	$3.85 billion	2.63	$131.30 million	$0.73	30.95

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

Profitability

This table compares Accel Entertainment and GameStop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Accel Entertainment	2.75%	28.46%	6.81%
GameStop	9.41%	7.72%	5.13%

Analyst Recommendations

This is a summary of current recommendations and price targets for Accel Entertainment and GameStop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Accel Entertainment	0	2	2	0	2.50
GameStop	1	1	0	0	1.50

Accel Entertainment currently has a consensus price target of $15.50, indicating a potential upside of 55.39%. GameStop has a consensus price target of $13.50, indicating a potential downside of 40.25%. Given Accel Entertainment’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Accel Entertainment is more favorable than GameStop.

Risk & Volatility

Accel Entertainment has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, GameStop has a beta of -0.86, suggesting that its share price is 186% less volatile than the S&P 500.

Insider and Institutional Ownership

55.4% of Accel Entertainment shares are owned by institutional investors. Comparatively, 29.2% of GameStop shares are owned by institutional investors. 18.3% of Accel Entertainment shares are owned by insiders. Comparatively, 8.6% of GameStop shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Accel Entertainment beats GameStop on 8 of the 14 factors compared between the two stocks.

About Accel Entertainment

Accel Entertainment, Inc., together with its subsidiaries, operates as a distributed gaming operator in the United States. It is involved in the installation, maintenance, and operation of gaming terminals; redemption devices that disburse winnings and contain automated teller machine (ATM) functionality; and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores. The company also provides gaming solutions to the location partners. In addition, it operates stand-alone ATMs in gaming and non-gaming locations, as well as amusement devices, including jukeboxes, dartboards, pool tables, and other related entertainment equipment. The company is headquartered in Burr Ridge, Illinois.

About GameStop

GameStop Corp., a specialty retailer, provides games and entertainment products through its stores and ecommerce platforms in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, and virtual reality products; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It sells collectibles comprising apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, as well as engages in the digital asset wallet and NFT marketplace activities. The company operates stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer magazine, a print and digital gaming publication. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.