Critical Review: Nintendo (OTCMKTS:NTDOY) vs. GameSquare (NASDAQ:GAME)

GameSquare (NASDAQ:GAME) and Nintendo (OTCMKTS:NTDOY) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares GameSquare and Nintendo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GameSquare	-60.09%	-54.32%	-19.19%
Nintendo	18.91%	13.03%	10.18%

Volatility and Risk

GameSquare has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Nintendo has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.

Valuation & Earnings

This table compares GameSquare and Nintendo”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GameSquare	$45.00 million	0.96	-$40.10 million	($0.55)	-0.82
Nintendo	$7.65 billion	8.79	$1.84 billion	$0.57	22.91

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

Institutional and Insider Ownership

64.3% of GameSquare shares are held by institutional investors. Comparatively, 0.0% of Nintendo shares are held by institutional investors. 5.1% of GameSquare shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

GameSquare pays an annual dividend of $1.02 per share and has a dividend yield of 225.0%. Nintendo pays an annual dividend of $0.08 per share and has a dividend yield of 0.6%. GameSquare pays out -185.5% of its earnings in the form of a dividend. Nintendo pays out 14.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. GameSquare is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for GameSquare and Nintendo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GameSquare	2	0	0	0	1.00
Nintendo	1	4	2	2	2.56

Summary

Nintendo beats GameSquare on 11 of the 16 factors compared between the two stocks.

About GameSquare

GameSquare Holdings, Inc. operates as a vertically integrated digital media, entertainment, and technology company. Its platform to connect with gaming and youth culture audiences. The company’s end-to-end platform includes Code Red Esports Ltd., an esports talent agency; GCN, a digital media company focusing on the gaming and esports audience; Zoned, a gaming and lifestyle marketing agency; Complexity Gaming, a esports organization operating; Fourth Frame Studios, a creative production studio; and Mission Supply, a merchandise and consumer products business; Frankly Media, programmatic advertising, Stream Hatchet, live streaming analytics, and Sideqik a social influencer marketing platform. The company also engages in providing marketing and creative services, offering leading data and analytics solutions. The company was formerly known as Engine Gaming & Media, Inc. GameSquare Holdings, Inc. is headquartered in Frisco, Texas.

About Nintendo

Nintendo Co., Ltd., together with its subsidiaries, develops, manufactures, and sells home entertainment products in Japan, the Americas, Europe, and internationally. It also offers video game platforms, playing cards, Karuta, and other products; and handheld and home console hardware systems and related software. The company was formerly known as Nintendo Playing Card Co., Ltd. and changed its name to Nintendo Co., Ltd. in 1963. Nintendo Co., Ltd. was founded in 1889 and is headquartered in Kyoto, Japan.