GameStop (NYSE:GME – Get Free Report) and PENN Entertainment (NASDAQ:PENN – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for GameStop and PENN Entertainment, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| GameStop | 1 | 1 | 0 | 0 | 1.50 |
| PENN Entertainment | 2 | 6 | 9 | 0 | 2.41 |
GameStop presently has a consensus target price of $13.50, indicating a potential downside of 42.01%. PENN Entertainment has a consensus target price of $19.67, indicating a potential upside of 63.21%. Given PENN Entertainment’s stronger consensus rating and higher probable upside, analysts plainly believe PENN Entertainment is more favorable than GameStop.
Volatility & Risk
Insider and Institutional Ownership
29.2% of GameStop shares are owned by institutional investors. Comparatively, 91.7% of PENN Entertainment shares are owned by institutional investors. 8.6% of GameStop shares are owned by insiders. Comparatively, 2.7% of PENN Entertainment shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares GameStop and PENN Entertainment”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| GameStop | $3.82 billion | 2.73 | $131.30 million | $0.82 | 28.39 |
| PENN Entertainment | $6.58 billion | 0.24 | -$311.50 million | ($6.35) | -1.90 |
GameStop has higher earnings, but lower revenue than PENN Entertainment. PENN 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 GameStop and PENN Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| GameStop | 11.08% | 9.75% | 5.80% |
| PENN Entertainment | -13.24% | -4.59% | -0.83% |
Summary
GameStop beats PENN Entertainment on 9 of the 14 factors compared between the two stocks.
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.
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.
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