Analyzing MGM Resorts International (NYSE:MGM) and Rave Restaurant Group (NASDAQ:RAVE)

Rave Restaurant Group (NASDAQ:RAVE) and MGM Resorts International (NYSE:MGM) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rave Restaurant Group	23.19%	19.22%	16.81%
MGM Resorts International	2.40%	23.30%	1.90%

Earnings and Valuation

This table compares Rave Restaurant Group and MGM Resorts International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rave Restaurant Group	$12.63 million	2.58	$2.70 million	$0.21	10.90
MGM Resorts International	$17.54 billion	0.48	$205.86 million	$1.65	20.42

MGM Resorts International has higher revenue and earnings than Rave Restaurant Group. Rave Restaurant Group 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.

Risk and Volatility

Rave Restaurant Group has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, MGM Resorts International has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.

Institutional & Insider Ownership

15.1% of Rave Restaurant Group shares are owned by institutional investors. Comparatively, 68.1% of MGM Resorts International shares are owned by institutional investors. 28.0% of Rave Restaurant Group shares are owned by insiders. Comparatively, 3.4% of MGM Resorts International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Rave Restaurant Group and MGM Resorts International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rave Restaurant Group	0	1	0	0	2.00
MGM Resorts International	2	9	10	2	2.52

MGM Resorts International has a consensus price target of $52.24, suggesting a potential upside of 55.08%. Given MGM Resorts International’s stronger consensus rating and higher possible upside, analysts clearly believe MGM Resorts International is more favorable than Rave Restaurant Group.

Summary

MGM Resorts International beats Rave Restaurant Group on 11 of the 15 factors compared between the two stocks.

About Rave Restaurant Group

Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.

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.