In the world of consumer discretionary stocks, two companies stand out for their unique market positions: Motorsport Games (NASDAQ:MSGM) and MGM Resorts International (NYSE:MGM). While both are prominent in their respective fields, the question arises: which is the better investment? This article delves into a detailed comparison based on analyst recommendations, profitability, earnings, dividends, valuation, risk, and institutional ownership.
Risk and Volatility
Investors often consider a stock’s volatility as a measure of risk. Motorsport Games exhibits a beta of 1.83, suggesting its share price is 83% more volatile than the S&P 500. In contrast, MGM Resorts International has a beta of 1.76, indicating a slightly lower volatility at 76% more than the S&P 500. This data highlights the inherent risk associated with both stocks, albeit with Motorsport Games being marginally more unpredictable.
Analyst Recommendations
According to MarketBeat, recent ratings show a favorable outlook for Motorsport Games. The company holds a consensus target price of $5.00, implying a potential upside of 68.07%. Meanwhile, MGM Resorts International has a target price of $48.06, suggesting a 28.35% upside.
Given Motorsport Games’ higher probable upside, research analysts clearly believe Motorsport Games is more favorable than MGM Resorts International.
Profitability and Institutional Ownership
Profitability is a crucial factor for investors. Motorsport Games boasts net margins of 7.63%, return on equity of 28.87%, and return on assets of 8.54%. Meanwhile, MGM Resorts International reports net margins of 3.95%, return on equity of 20.64%, and return on assets of 1.82%. These figures illustrate Motorsport Games’ stronger profitability metrics.
Institutional ownership further differentiates the two. Only 1.7% of Motorsport Games shares are held by institutional investors, compared to a significant 68.1% for MGM Resorts International. Strong institutional ownership often indicates confidence in a company’s long-term growth prospects.
Valuation and Earnings
When evaluating valuation and earnings, MGM Resorts International leads with higher revenue and earnings figures. The company generated $17.24 billion in revenue and $746.56 million in net income, with an earnings per share (EPS) of $2.24. In comparison, Motorsport Games reported $8.69 million in revenue and a net income loss of $2.75 million, with an EPS of $0.31.
Despite these figures, Motorsport Games trades at a lower price-to-earnings ratio than MGM, suggesting it might be more affordable for investors seeking value.
Company Overviews
Motorsport Games
Founded in 2018 and headquartered in Miami, Florida, Motorsport Games Inc. develops and publishes multi-platform racing video games. The company operates through Gaming and Esports segments, offering titles such as rFactor 2, NASCAR Heat Mobile, and Le Mans Ultimate. It also organizes esports tournaments, enhancing its presence in the digital gaming world.
MGM Resorts International
MGM Resorts International, based in Las Vegas, Nevada, is a global leader in casino, hotel, and entertainment resorts. The company operates through segments like Las Vegas Strip Resorts and MGM China, offering gaming, dining, and entertainment experiences. Its online sports betting and iGaming services are provided through BetMGM, catering to a diverse clientele ranging from leisure travelers to business groups.
As both companies continue to evolve, investors must consider their unique market positions, growth potential, and financial health. While Motorsport Games offers a higher potential upside, MGM Resorts International provides stability through its extensive institutional backing and diverse revenue streams.
