Comparing Churchill Downs (NASDAQ:CHDN) and DraftKings (NASDAQ:DKNG)

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

Insider & Institutional Ownership

37.7% of DraftKings shares are held by institutional investors. Comparatively, 82.6% of Churchill Downs shares are held by institutional investors. 47.1% of DraftKings shares are held by company insiders. Comparatively, 5.3% of Churchill Downs shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for DraftKings and Churchill Downs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DraftKings	2	5	24	0	2.71
Churchill Downs	0	1	11	0	2.92

DraftKings presently has a consensus price target of $36.76, indicating a potential upside of 54.34%. Churchill Downs has a consensus price target of $135.00, indicating a potential upside of 43.95%. Given DraftKings’ higher probable upside, analysts clearly believe DraftKings is more favorable than Churchill Downs.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DraftKings	0.06%	5.36%	0.96%
Churchill Downs	13.09%	43.26%	6.06%

Volatility & Risk

DraftKings has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500. Comparatively, Churchill Downs has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Valuation & Earnings

This table compares DraftKings and Churchill Downs”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DraftKings	$6.05 billion	1.94	$3.71 million	($0.04)	-595.50
Churchill Downs	$2.93 billion	2.23	$383.00 million	$5.26	17.83

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

Summary

Churchill Downs beats DraftKings on 9 of the 14 factors compared between the two stocks.

About DraftKings

DraftKings Inc. operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators. In addition, it offers DraftKings marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions. The company is headquartered in Boston, Massachusetts.

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.