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Prospects for the entertainment industry are expected to further improve due to the growing popularity of digital platforms and relaxation of gambling laws. Entertainment stocks DraftKings (DKNG) and International Game Technology (IGT) are well-positioned to benefit from industry tailwinds, but let’s take a look at which stock is a better buy right now. read… .
In this article, we will discuss the entertainment stock DraftKings Co., Ltd. (DKNG) and International Game Technology PLC (IGT) to predict which entertainment stocks are better picks during March’s turmoil. After thoroughly evaluating these stocks, he believes IGT may be a better choice for the reasons explained in this article.
Significant advances in technology have revolutionized the way entertainment content is created, distributed, and consumed. Digital platforms, streaming services, augmented and virtual reality (AR&VR), and high-speed internet access are expanding the scope and convenience of entertainment and attracting larger audiences around the world.
According to a Custom Market Insights report, the global entertainment industry is expected to grow rapidly. CAGR 11% By 2032.
Furthermore, the expansion of the gambling industry is driven by the increasing popularity and proliferation of online platforms.The rest is legalization of gambling And the attractiveness of high dividends further shapes market growth trends. The global casino gambling market is expected to grow from $150.29 billion in 2024 to $191.36 billion by 2029. CAGR 5%.
Annual gaming revenue in the United States has reached its highest level for the third year in a row, according to data compiled by the American Gaming Association (AGA).Total revenue from land-based casino games, sports betting, and iGaming Total amount in 2023 is $66.52 billionan increase of 10% from the previous record set in 2022.
Additionally, in the fourth quarter of 2023, commercial gaming revenue reached $17.42 billion, registering a 9.5 percent year-over-year growth. December revenue was $6.22 billion, an increase of 13.3% year-over-year and the highest single-month total. This year, the U.S. gaming sector could set a new record due to the continued expansion of online gaming.
The bright outlook in the entertainment industry should bring significant benefits to DNKG and IGT.
DKNG has risen 20.6% over the past month, while IGT has fallen 16.5%. Additionally, DKNG has risen 36.9% over the past three months, while IGT has fallen 22.9%.
However, here’s why I think IGT will perform better in the short term.
recent trends
On March 7, 2024, DKNG announced plans to launch the top-rated online sportsbook in North Carolina. This announcement is the culmination of DraftKings’ continued work with stakeholders and regulators across North Carolina to provide fans with responsible sports betting options.
With this launch, DraftKings Sportsbook will be available in 27 states in the United States and Ontario, Canada.
On March 14, 2024, IGT announced that the IGT PlayDigital iGaming content library is now available through the Bally Casino Rhode Island app and BallyCasino.com in Rhode Island. This milestone content rollout makes IGT PlayDigital one of only two suppliers to provide content to all seven of his online gaming jurisdictions in the United States.
Recent financial results
DKNG’s revenue for the fiscal year ending December 2023 was $3.67 billion, an increase of 63.6% year over year. However, the company’s operating loss was $789.23 million. The companies also reported net losses attributable to common stockholders of $802.14 million, or $1.73 per share.
IGT’s total revenue for the fourth quarter ended December 31, 2023 was $1.13 billion, an increase of 3% from the same period last year. Operating income increased 11.3% year-on-year to $256 million. Additionally, the company’s net income was $27 million (compared to the previous year’s net loss of $31 million).
Past and expected financial performance
Over the past three years, DKNG’s revenue has grown at a CAGR of 81.4%. Furthermore, the company’s total assets increased at a CAGR of 4.7% over the same period.
Street expects DKNG’s sales to increase 31.2% in the fiscal year ending December 2024. However, the company is expected to report a loss per share of $0.29 in the first quarter (ending March 2024) and $0.20 in fiscal 2024.
IGT’s revenue has grown at a CAGR of 11.4% over the past three years. Additionally, EBITDA and leveraged free cash flow grew at a CAGR of 25.8% and 103.8%, respectively, over the same period.
Analysts expect IGT’s revenue to grow 1.1% year over year for the fiscal year ending December 2024. For the fiscal year ending December 2025, the company’s revenue and EPS are expected to increase 3.5% year-over-year and 26% to $4.51. 1 billion and $2.33, respectively.
evaluation
In terms of future EV/Sales, IGT is currently trading at 2.33x, 51.8% lower than DKNG, which is trading at 4.83x. IGT’s forward EV/EBITDA multiple is 6x, lower than DKNG’s 48.09x.Similarly IGT forward EV/Sales 2.33x is lower than DKNG’s 4.83x.
Therefore, IGT is relatively affordable.
Profitability
IGT’s trailing 12-month revenue is 1.2x the revenue generated by DKNG. Moreover, IGT is highly profitable, with trailing twelve month gross margin of 48.89%, compared to DKNG’s 37.46%. Also, IGT’s trailing 12-month EBIT margin and net profit margin were 24.11% and 3.62%, respectively, which were higher than DKNG’s -21.45% and -21.88%.
Furthermore, IGT’s ROE, ROA, and ROTC for the trailing twelve months were 15.62%, 2.69%, and 8.15%, compared to the industry average of -74.17%, 20.75%, and 20.33%, respectively.
power rating
DKNG’s overall rating is D, which corresponds to a “sell” in our own rating. power rating system. Conversely, IGT’s overall rating is B, which equates to a “buy.” POWR ratings are calculated by considering 118 different factors, with each factor weighted to the best degree.
Our proprietary rating system also evaluates each stock based on eight different categories. DKNG value is D grade. The company’s future EV/EBITDA is 46.76x, which is 388.2% higher than the industry average of 9.58x. The company has a forward price/cash flow multiple of 48.74, which is 371.2% higher than the industry average of 10.35x.
On the other hand, IGT’s Value is B grade. IGT’s forward EV/EBITDA is 6.02x, which is 37.1% lower than the industry average of 9.58x. Additionally, the company has a forward price/cash flow multiple of 4.67, which is 54.8% lower than the industry average of 10.35.
Of the 28 stocks, Entertainment – Casino/Gambling In the industry, DKNG is ranked 25th and IGT is ranked 2nd.
In addition to the above, we also evaluated both stocks for quality, growth, stability, momentum, and sentiment. Get all reviews for DKNG here. click here To view your IGT rating,
winner
The entertainment industry is expanding significantly due to rapid technological innovation, the popularity and proliferation of online platforms, and the continued relaxation of gambling laws. Industry players His DKNG and His IGT are well-positioned to benefit from the rosy outlook for the industry.
However, DKNG’s deteriorating financials, slowing profitability, and high valuation make competitor IGT a better buy.
Our research shows that investing in stocks with an overall rating of Strong Buy or Buy increases your odds of success.Entertainment – See all top-rated stocks in the Casino/Gambling industry here.
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IGT stock was unchanged in premarket trading Wednesday. Year-to-date, IGT has fallen -21.38%. In comparison, the benchmark S&P 500 index rose 9.49% during the same period.
About the author: Nidhi Agarwal
Nidhi has a passion for capital markets and asset management, which led her to pursue a career as an investment analyst. She has a bachelor’s degree in finance and marketing and is in the CFA program. Her fundamental approach to stock analysis helps investors identify the best investment opportunities.
post Is DraftKings (DKNG) a better choice than International Game Technology (IGT) for March Madness? It first appeared stocknews.com