Reviewing Carnival (NYSE:CCL) and Dave & Buster’s Entertainment (NASDAQ:PLAY)

Dave & Buster’s Entertainment (NASDAQ:PLAY) and Carnival (NYSE:CCL) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Profitability

This table compares Dave & Buster’s Entertainment and Carnival’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dave & Buster’s Entertainment	-4.26%	-51.87%	-1.29%
Carnival	11.37%	24.83%	6.32%

Risk & Volatility

Dave & Buster’s Entertainment has a beta of 1.92, meaning that its stock price is 92% more volatile than the S&P 500. Comparatively, Carnival has a beta of 2.38, meaning that its stock price is 138% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Dave & Buster’s Entertainment and Carnival, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dave & Buster’s Entertainment	2	5	2	0	2.00
Carnival	0	6	21	1	2.82

Dave & Buster’s Entertainment presently has a consensus target price of $17.33, suggesting a potential upside of 149.04%. Carnival has a consensus target price of $34.14, suggesting a potential upside of 30.77%. Given Dave & Buster’s Entertainment’s higher possible upside, equities research analysts plainly believe Dave & Buster’s Entertainment is more favorable than Carnival.

Dividends

Dave & Buster’s Entertainment pays an annual dividend of $0.64 per share and has a dividend yield of 9.2%. Carnival pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. Dave & Buster’s Entertainment pays out -24.9% of its earnings in the form of a dividend. Carnival pays out 26.2% 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. Dave & Buster’s Entertainment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

91.4% of Dave & Buster’s Entertainment shares are owned by institutional investors. Comparatively, 67.2% of Carnival shares are owned by institutional investors. 1.7% of Dave & Buster’s Entertainment shares are owned by company insiders. Comparatively, 7.9% of Carnival shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Dave & Buster’s Entertainment and Carnival”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dave & Buster’s Entertainment	$2.08 billion	0.12	-$48.70 million	($2.57)	-2.71
Carnival	$26.62 billion	1.32	$2.76 billion	$2.29	11.40

Carnival has higher revenue and earnings than Dave & Buster’s Entertainment. Dave & Buster’s Entertainment is trading at a lower price-to-earnings ratio than Carnival, indicating that it is currently the more affordable of the two stocks.

Summary

Carnival beats Dave & Buster’s Entertainment on 13 of the 17 factors compared between the two stocks.

About Dave & Buster’s Entertainment

Dave & Buster's Entertainment, Inc. owns and operates entertainment and dining venues for adults and families. Its venues offer a menu of entrees and appetizers, as well as a selection of non-alcoholic and alcoholic beverages; and an assortment of entertainment attractions centered on playing games and watching live sports, and other televised events. The company operates its venues under the Dave & Buster's name. As of April 02, 2019, it owned and operated 125 venues in 39 states, Puerto Rico, and Canada. The company was founded in 1982 and is headquartered in Dallas, Texas.

About Carnival

Carnival Corp. engages in the operation of cruise ships. It operates through the following business segments: North America and Australia (NAA) Cruise, Europe and Asia (EA) Cruise Operations, Cruise Support, and Tour and Others. The North America and Australia (NAA) Cruise segment includes the Carnival Cruise Line, Holland America Line, Princess Cruises, and Seabourn. The Europe and Asia (EA) Cruise Operations segment consists of AIDA, Costa, Cunard, and P&O Cruises (UK). The Cruise Support segment represents port destinations and private islands for the benefit of its cruise brands. The Tour and Other segment operates hotel and transportation operations of Holland America Princess Alaska Tours. The company was founded in 1972 and is headquartered in Miami, FL.