Comparing Churchill Downs (NASDAQ:CHDN) and Electronic Arts (NASDAQ:EA)

Electronic Arts (NASDAQ:EA) and Churchill Downs (NASDAQ:CHDN) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Risk and Volatility

Electronic Arts has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Churchill Downs has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500.

Profitability

This table compares Electronic Arts and Churchill Downs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Electronic Arts	13.94%	18.43%	9.93%
Churchill Downs	15.22%	41.46%	6.10%

Dividends

Electronic Arts pays an annual dividend of $0.76 per share and has a dividend yield of 0.4%. Churchill Downs pays an annual dividend of $0.41 per share and has a dividend yield of 0.4%. Electronic Arts pays out 19.0% of its earnings in the form of a dividend. Churchill Downs pays out 7.0% 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. Churchill Downs has raised its dividend for 14 consecutive years.

Valuation and Earnings

This table compares Electronic Arts and Churchill Downs”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Electronic Arts	$7.47 billion	5.74	$1.12 billion	$3.99	42.99
Churchill Downs	$2.73 billion	2.63	$426.80 million	$5.82	17.60

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

Analyst Ratings

This is a summary of recent recommendations for Electronic Arts and Churchill Downs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Electronic Arts	0	15	11	2	2.54
Churchill Downs	0	0	10	0	3.00

Electronic Arts currently has a consensus price target of $167.1154, indicating a potential downside of 2.59%. Churchill Downs has a consensus price target of $136.50, indicating a potential upside of 33.22%. Given Churchill Downs’ stronger consensus rating and higher probable upside, analysts plainly believe Churchill Downs is more favorable than Electronic Arts.

Insider and Institutional Ownership

90.2% of Electronic Arts shares are held by institutional investors. Comparatively, 82.6% of Churchill Downs shares are held by institutional investors. 0.2% of Electronic Arts shares are held by insiders. Comparatively, 5.3% of Churchill Downs shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

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 Churchill Downs

Churchill Downs Incorporated operates as a racing, online wagering, and gaming entertainment company in the United States. It operates through three segments: Live and Historical Racing, TwinSpires, and Gaming. The company operates pari-mutuel gaming entertainment venues; TwinSpires, an online wagering platform for horse racing, sports, and iGaming; retail sports books; casino gaming; and Terre Haute Casino Resort. It also offers streaming video of live horse races, replays, and an assortment of racing and handicapping information; and provides the Bloodstock Research Information Services platform for horse racing statistical data. In addition, the company manufactures and operates pari-mutuel wagering systems for racetracks, off-track betting facilities, and other pari-mutuel wagering businesses. Churchill Downs Incorporated was founded in 1875 and is headquartered in Louisville, Kentucky.