Critical Contrast: Royal Caribbean Cruises (NYSE:RCL) and Caesars Entertainment (NASDAQ:CZR)

Royal Caribbean Cruises (NYSE:RCL) and Caesars Entertainment (NASDAQ:CZR) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Royal Caribbean Cruises and Caesars Entertainment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Caribbean Cruises	0	4	17	0	2.81
Caesars Entertainment	1	7	9	0	2.47

Royal Caribbean Cruises currently has a consensus target price of $349.20, suggesting a potential upside of 31.38%. Caesars Entertainment has a consensus target price of $32.93, suggesting a potential upside of 19.80%. Given Royal Caribbean Cruises’ stronger consensus rating and higher possible upside, analysts clearly believe Royal Caribbean Cruises is more favorable than Caesars Entertainment.

Insider & Institutional Ownership

87.5% of Royal Caribbean Cruises shares are owned by institutional investors. Comparatively, 91.8% of Caesars Entertainment shares are owned by institutional investors. 7.0% of Royal Caribbean Cruises shares are owned by insiders. Comparatively, 1.0% of Caesars Entertainment shares are owned by 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.

Risk and Volatility

Royal Caribbean Cruises has a beta of 1.93, meaning that its share price is 93% more volatile than the S&P 500. Comparatively, Caesars Entertainment has a beta of 1.87, meaning that its share price is 87% more volatile than the S&P 500.

Profitability

This table compares Royal Caribbean Cruises and Caesars Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royal Caribbean Cruises	23.80%	45.06%	10.87%
Caesars Entertainment	-4.37%	-7.97%	-1.00%

Valuation & Earnings

This table compares Royal Caribbean Cruises and Caesars Entertainment”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Caribbean Cruises	$17.94 billion	4.01	$4.27 billion	$15.61	17.03
Caesars Entertainment	$11.49 billion	0.49	-$502.00 million	($2.43)	-11.31

Royal Caribbean Cruises has higher revenue and earnings than Caesars Entertainment. Caesars Entertainment is trading at a lower price-to-earnings ratio than Royal Caribbean Cruises, indicating that it is currently the more affordable of the two stocks.

Summary

Royal Caribbean Cruises beats Caesars Entertainment on 13 of the 14 factors compared between the two stocks.

About Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. operates as a cruise company worldwide. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. As of February 21, 2024, it operated 65 ships. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.

About Caesars Entertainment

Caesars Entertainment, Inc. operates as a gaming and hospitality company. The company owns, leases, or manages domestic properties in 18 states with slot machines, video lottery terminals and e-tables, and hotel rooms, as well as table games, including poker. It also operates and conducts retail and online sports wagering across 31 jurisdictions in North America and operates iGaming in five jurisdictions in North America; sports betting from our retail and online sportsbooks; and other games, such as keno. In addition, the company operates dining venues, bars, nightclubs, lounges, hotels, and entertainment venues; and provides staffing and management services. Caesars Entertainment, Inc. was founded in 1937 and is based in Reno, Nevada.