MGM Resorts International (NYSE:MGM) and Advanced Drainage Systems (NYSE:WMS) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.
Valuation and Earnings
This table compares MGM Resorts International and Advanced Drainage Systems' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| MGM Resorts International | $12.90 billion | 1.58 | $2.05 billion | $0.77 | 53.45 |
| Advanced Drainage Systems | $1.67 billion | 4.77 | $-193,170,000.00 | ($3.21) | -35.13 |
MGM Resorts International has higher revenue and earnings than Advanced Drainage Systems. Advanced Drainage Systems is trading at a lower price-to-earnings ratio than MGM Resorts International, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
63.4% of MGM Resorts International shares are owned by institutional investors. Comparatively, 84.1% of Advanced Drainage Systems shares are owned by institutional investors. 5.1% of MGM Resorts International shares are owned by company insiders. Comparatively, 20.7% of Advanced Drainage Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of current recommendations and price targets for MGM Resorts International and Advanced Drainage Systems, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| MGM Resorts International | 3 | 11 | 5 | 0 | 2.11 |
| Advanced Drainage Systems | 0 | 2 | 3 | 0 | 2.60 |
MGM Resorts International presently has a consensus target price of $29.5625, suggesting a potential downside of 28.18%. Advanced Drainage Systems has a consensus target price of $99.50, suggesting a potential downside of 11.76%. Given Advanced Drainage Systems' stronger consensus rating and higher probable upside, analysts plainly believe Advanced Drainage Systems is more favorable than MGM Resorts International.
Profitability
This table compares MGM Resorts International and Advanced Drainage Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| MGM Resorts International | 20.81% | -12.08% | -4.10% |
| Advanced Drainage Systems | 5.71% | 19.10% | 4.33% |
Dividends
MGM Resorts International pays an annual dividend of $0.01 per share and has a dividend yield of 0.0%. Advanced Drainage Systems pays an annual dividend of $0.36 per share and has a dividend yield of 0.3%. MGM Resorts International pays out 1.3% of its earnings in the form of a dividend. Advanced Drainage Systems pays out -11.2% 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. MGM Resorts International has increased its dividend for 1 consecutive years and Advanced Drainage Systems has increased its dividend for 1 consecutive years. Advanced Drainage Systems is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
MGM Resorts International has a beta of 2.42, suggesting that its stock price is 142% more volatile than the S&P 500. Comparatively, Advanced Drainage Systems has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.
Summary
Advanced Drainage Systems beats MGM Resorts International on 10 of the 16 factors compared between the two stocks.
