Critical Review: Nintendo (OTCMKTS:NTDOY) & PENN Entertainment (NASDAQ:PENN)

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

Institutional & Insider Ownership

91.7% of PENN Entertainment shares are held by institutional investors. Comparatively, 0.0% of Nintendo shares are held by institutional investors. 2.7% of PENN Entertainment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares PENN Entertainment and Nintendo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PENN Entertainment	$6.58 billion	0.27	-$311.50 million	($6.35)	-2.07
Nintendo	$7.65 billion	9.47	$1.84 billion	$0.57	24.47

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

Risk & Volatility

PENN Entertainment has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500. Comparatively, Nintendo has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for PENN Entertainment and Nintendo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PENN Entertainment	2	6	9	0	2.41
Nintendo	1	4	2	2	2.56

PENN Entertainment currently has a consensus price target of $19.67, indicating a potential upside of 49.67%. Given PENN Entertainment’s higher probable upside, analysts plainly believe PENN Entertainment is more favorable than Nintendo.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PENN Entertainment	-13.24%	-4.59%	-0.83%
Nintendo	18.91%	13.16%	10.33%

Summary

Nintendo beats PENN Entertainment on 10 of the 15 factors compared between the two stocks.

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.

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.