Critical Analysis: Wingstop (NASDAQ:WING) versus MGM Resorts International (NYSE:MGM)

MGM Resorts International (NYSE:MGM) and Wingstop (NASDAQ:WING) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Profitability

This table compares MGM Resorts International and Wingstop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MGM Resorts International	2.40%	23.30%	1.90%
Wingstop	16.15%	-16.31%	18.05%

Insider and Institutional Ownership

68.1% of MGM Resorts International shares are held by institutional investors. 3.4% of MGM Resorts International shares are held by company insiders. Comparatively, 0.5% of Wingstop shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for MGM Resorts International and Wingstop, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MGM Resorts International	3	8	9	2	2.45
Wingstop	1	5	21	2	2.83

MGM Resorts International currently has a consensus target price of $48.47, indicating a potential upside of 70.42%. Wingstop has a consensus target price of $233.74, indicating a potential upside of 76.08%. Given Wingstop’s stronger consensus rating and higher probable upside, analysts clearly believe Wingstop is more favorable than MGM Resorts International.

Risk and Volatility

MGM Resorts International has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Wingstop has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500.

Earnings & Valuation

This table compares MGM Resorts International and Wingstop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MGM Resorts International	$17.54 billion	0.41	$205.86 million	$1.65	17.24
Wingstop	$696.85 million	5.19	$174.27 million	$4.21	31.53

MGM Resorts International has higher revenue and earnings than Wingstop. MGM Resorts International is trading at a lower price-to-earnings ratio than Wingstop, indicating that it is currently the more affordable of the two stocks.

Summary

Wingstop beats MGM Resorts International on 9 of the 14 factors compared between the two stocks.

About MGM Resorts International

MGM Resorts International, through its subsidiaries, owns and operates casino, hotel, and entertainment resorts in the United States and internationally. The company operates through three segments: Las Vegas Strip Resorts, Regional Operations, and MGM China. Its casino resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. The company's casino operations include slots and table games, as well as online sports betting and iGaming through BetMGM. Its customers include premium gaming customers; leisure and wholesale travel customers; business travelers; and group customers, including conventions, trade associations, and small meetings. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was incorporated in 1986 and is based in Las Vegas, Nevada.

About Wingstop

Wingstop Inc., together with its subsidiaries, franchises and operates restaurants under the Wingstop brand. Its restaurants offer classic wings, boneless wings, tenders, and hand-sauced-and-tossed in various flavors, as well as chicken sandwiches with fries and hand-cut carrots and celery that are cooked-to-order. The company was founded in 1994 and is headquartered in Addison, Texas.