Critical Contrast: Sabre (NASDAQ:SABR) versus Churchill Downs (NASDAQ:CHDN)

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sabre	1	3	1	0	2.00
Churchill Downs	0	1	10	0	2.91

Sabre currently has a consensus price target of $1.75, suggesting a potential downside of 9.33%. Churchill Downs has a consensus price target of $134.89, suggesting a potential upside of 77.11%. Given Churchill Downs’ stronger consensus rating and higher probable upside, analysts clearly believe Churchill Downs is more favorable than Sabre.

Dividends

Sabre pays an annual dividend of $0.56 per share and has a dividend yield of 29.0%. Churchill Downs pays an annual dividend of $0.43 per share and has a dividend yield of 0.6%. Sabre pays out 33.9% of its earnings in the form of a dividend. Churchill Downs pays out 7.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Churchill Downs has raised its dividend for 14 consecutive years.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sabre	$2.85 billion	0.27	$524.62 million	$1.65	1.17
Churchill Downs	$2.99 billion	1.77	$383.00 million	$5.83	13.06

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sabre	25.14%	N/A	-2.12%
Churchill Downs	13.82%	42.16%	6.31%

Risk and Volatility

Sabre has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Churchill Downs has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Institutional & Insider Ownership

89.4% of Sabre shares are held by institutional investors. Comparatively, 82.6% of Churchill Downs shares are held by institutional investors. 2.8% of Sabre shares are held by insiders. Comparatively, 5.9% of Churchill Downs shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Churchill Downs beats Sabre on 12 of the 17 factors compared between the two stocks.

About Sabre

Sabre Corporation, together with its subsidiaries, operates as software and technology company for travel industry in the United States, Europe, Asia-Pacific, and internationally. It operates through two segments: Travel Solutions and Hospitality Solutions. The Travel Solutions segment operates a business-to-business travel marketplace that offers travel content, such as inventory, prices, and availability from a range of travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines, and tour operators with a network of travel buyers comprising online and offline travel agencies, travel management companies, and corporate travel departments. This segment provides a portfolio of software technology products and solutions through software-as-a-service (SaaS) and hosted delivery models to airlines and other travel suppliers. Its products include reservation systems for carriers, commercial and operations products, agency solutions, and data-driven intelligence solutions. Its Hospitality Solutions segment provides software and solutions to hoteliers through SaaS and hosted delivery models. Sabre Corporation was incorporated in 2006 and is headquartered in Southlake, Texas.

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.