PENN Entertainment (NASDAQ:PENN) versus Light & Wonder (NASDAQ:LNW) Critical Comparison

Light & Wonder (NASDAQ:LNW) and PENN Entertainment (NASDAQ:PENN) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, profitability, institutional ownership, analyst recommendations, valuation, dividends and risk.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Light & Wonder and PENN Entertainment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Light & Wonder	1	4	5	0	2.40
PENN Entertainment	2	6	10	0	2.44

Light & Wonder currently has a consensus price target of $102.14, suggesting a potential upside of 12.08%. PENN Entertainment has a consensus price target of $22.60, suggesting a potential upside of 54.79%. Given PENN Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe PENN Entertainment is more favorable than Light & Wonder.

Institutional & Insider Ownership

88.1% of Light & Wonder shares are owned by institutional investors. Comparatively, 91.7% of PENN Entertainment shares are owned by institutional investors. 2.2% of Light & Wonder shares are owned by insiders. Comparatively, 2.7% of PENN Entertainment shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Light & Wonder and PENN Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Light & Wonder	10.89%	71.17%	8.73%
PENN Entertainment	-1.12%	-4.36%	-0.85%

Risk and Volatility

Light & Wonder has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500. Comparatively, PENN Entertainment has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500.

Valuation & Earnings

This table compares Light & Wonder 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
Light & Wonder	$3.22 billion	2.31	$336.00 million	$4.59	19.86
PENN Entertainment	$6.82 billion	0.29	-$311.50 million	($6.35)	-2.30

Light & Wonder has higher earnings, but lower revenue than PENN Entertainment. PENN Entertainment is trading at a lower price-to-earnings ratio than Light & Wonder, indicating that it is currently the more affordable of the two stocks.

About Light & Wonder

Light & Wonder, Inc. is a cross-platform global games company, which engages in the development of content and digital markets. It operates through the following segments: Gaming, SciPlay, and iGaming. The Gaming segment includes the design, manufacture, marketing, and distribution of portfolio of gaming products and services. The SciPlay segment involves the development and publishing of digital games on mobile and web platforms. The iGaming segment focuses on the provision of digital gaming content, distribution platforms, player account management systems, and services. The company was founded on July 2, 1984 and is headquartered in Las Vegas, NV.

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.