Contrasting Red Rock Resorts (NASDAQ:RRR) and Capcom (OTCMKTS:CCOEY)

Capcom (OTCMKTS:CCOEY) and Red Rock Resorts (NASDAQ:RRR) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Volatility and Risk

Capcom has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500. Comparatively, Red Rock Resorts has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares Capcom and Red Rock Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Capcom	32.82%	26.93%	21.51%
Red Rock Resorts	9.35%	58.13%	4.72%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Capcom and Red Rock Resorts, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capcom	0	1	0	0	2.00
Red Rock Resorts	0	3	12	0	2.80

Red Rock Resorts has a consensus price target of $71.36, suggesting a potential upside of 26.18%. Given Red Rock Resorts’ stronger consensus rating and higher possible upside, analysts plainly believe Red Rock Resorts is more favorable than Capcom.

Insider & Institutional Ownership

47.8% of Red Rock Resorts shares are owned by institutional investors. 53.8% of Red Rock Resorts shares are owned 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.

Dividends

Capcom pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Red Rock Resorts pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. Capcom pays out 15.7% of its earnings in the form of a dividend. Red Rock Resorts pays out 33.2% 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.

Valuation and Earnings

This table compares Capcom and Red Rock Resorts”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capcom	$1.11 billion	11.08	$319.78 million	$0.51	22.71
Red Rock Resorts	$2.01 billion	2.95	$188.07 million	$3.13	18.07

Capcom has higher earnings, but lower revenue than Red Rock Resorts. Red Rock Resorts is trading at a lower price-to-earnings ratio than Capcom, indicating that it is currently the more affordable of the two stocks.

Summary

Red Rock Resorts beats Capcom on 10 of the 16 factors compared between the two stocks.

About Capcom

Capcom Co., Ltd. plans, develops, manufactures, sells, and distributes home video games, online games, mobile games, and arcade games in Japan and internationally. It operates through Digital Contents, Arcade Operations, Amusement Equipments, and Other Businesses segments. The Digital Contents segment develops and sells digital game content for consumer home video game platforms, as well as mobile content and PC online games. The Arcade Operations segment operates Plaza Capcom amusement facilities primarily in commercial complexes, as well as hosts various events. The Amusement Equipments segment is involved in the development, manufacture, and sale of software, frames and LCD devices for gaming machines. The Other Businesses segment engages in the adapting game content into movies, animated television programs, music CDs, and merchandise; and devoting resources to esports. Capcom Co., Ltd. was incorporated in 1979 and is headquartered in Osaka, Japan.

About Red Rock Resorts

Red Rock Resorts, Inc., through its interest in Station Casinos LLC, develops and operates casino and entertainment properties in the United States. The company owns and operates gaming and entertainment facilities, including Durango Casino & Resort and smaller casinos in the Las Vegas regional market. The company was formerly known as Station Casinos Corp. and changed its name to Red Rock Resorts, Inc. in January 2016. Red Rock Resorts, Inc. was founded in 1976 and is based in Las Vegas, Nevada.