Financial Analysis: The Madison Square Garden (MSG) versus Golden Entertainment (GDEN)

The Madison Square Garden (NYSE: MSG) and Golden Entertainment (NASDAQ:GDEN) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Institutional and Insider Ownership

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70.9% of The Madison Square Garden shares are held by institutional investors. Comparatively, 39.2% of Golden Entertainment shares are held by institutional investors. 20.4% of The Madison Square Garden shares are held by company insiders. Comparatively, 52.0% of Golden Entertainment shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares The Madison Square Garden and Golden Entertainment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Madison Square Garden $1.32 billion 4.34 -$72.72 million ($1.11) -219.05
Golden Entertainment $509.81 million 1.35 $2.17 million $0.34 74.18

Golden Entertainment has lower revenue, but higher earnings than The Madison Square Garden. The Madison Square Garden is trading at a lower price-to-earnings ratio than Golden Entertainment, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

The Madison Square Garden has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500. Comparatively, Golden Entertainment has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for The Madison Square Garden and Golden Entertainment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Madison Square Garden 0 2 5 0 2.71
Golden Entertainment 0 1 3 0 2.75

The Madison Square Garden presently has a consensus price target of $222.00, suggesting a potential downside of 8.70%. Golden Entertainment has a consensus price target of $35.00, suggesting a potential upside of 38.78%. Given Golden Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe Golden Entertainment is more favorable than The Madison Square Garden.

Profitability

This table compares The Madison Square Garden and Golden Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Madison Square Garden 5.21% -1.00% -0.67%
Golden Entertainment 0.43% 1.86% 0.70%

Summary

Golden Entertainment beats The Madison Square Garden on 8 of the 13 factors compared between the two stocks.

About The Madison Square Garden

The Madison Square Garden Company, through its subsidiaries, engages in sports and entertainment businesses in the United States. The company operates in two segments, MSG Sports and MSG Entertainment. The MSG Sports segment owns and operates professional sports franchises, as well as promotes, produces, and/or presents a range of other live sporting events, including professional boxing, college basketball, college hockey, professional bull riding, mixed martial arts, esports, tennis, and college wrestling. The MSG Entertainment segment presents or hosts live entertainment events comprising concerts, family shows, performing arts, and special events, as well as creates, produces, and/or presents live productions in its venues. The company also operates 24 entertainment dining and nightlife venues in New York City, Las Vegas, and Los Angeles, as well as in Sydney, Australia, primarily under the Tao, Marquee, Lavo, Avenue, The Stanton Social, Beauty & Essex, and Vandal brands; and manages the food and beverage operations at the Dream Downtown and Dream Midtown hotels in New York City. The Madison Square Garden Company was founded in 1879 and is based in New York, New York.

About Golden Entertainment

Golden Entertainment, Inc. is a group of gaming companies. The Company focuses on distributed gaming, including tavern gaming, and casino and resort operations. It operates through two segments: Distributed Gaming and Casinos. Its Distributed Gaming segment involves the installation, maintenance and operation of gaming and amusement devices in certain strategic, high-traffic, non-casino locations (such as grocery stores, convenience stores, restaurants, bars, taverns, saloons and liquor stores) in Nevada and Montana, and the operation of traditional, branded taverns targeting local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. As of October 23, 2017, its distributed gaming operations consisted of approximately 16,000 gaming devices in approximately 960 locations. Its Casinos segment consists of the Rocky Gap Casino Resort in Flintstone, Maryland and three casinos in Pahrump, Nevada: Pahrump Nugget Hotel Casino, Gold Town Casino and Lakeside Casino & RV Park.

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