DraftKings (NASDAQ:DKNG) & Churchill Downs (NASDAQ:CHDN) Critical Review

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

Insider and Institutional Ownership

82.6% of Churchill Downs shares are owned by institutional investors. Comparatively, 37.7% of DraftKings shares are owned by institutional investors. 5.3% of Churchill Downs shares are owned by company insiders. Comparatively, 51.2% of DraftKings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Churchill Downs and DraftKings, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Churchill Downs	0	1	11	0	2.92
DraftKings	2	4	25	0	2.74

Churchill Downs currently has a consensus price target of $135.00, suggesting a potential upside of 61.04%. DraftKings has a consensus price target of $37.19, suggesting a potential upside of 48.12%. Given Churchill Downs’ stronger consensus rating and higher possible upside, equities analysts clearly believe Churchill Downs is more favorable than DraftKings.

Volatility & Risk

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Churchill Downs	$2.93 billion	2.00	$383.00 million	$5.26	15.94
DraftKings	$6.05 billion	2.04	$3.71 million	($0.04)	-627.75

Churchill Downs has higher earnings, but lower revenue 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 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.

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.