DraftKings vs. Penn National Gaming: Which Stock is a Better Buy?

: DKNG | DraftKings Inc. Cl A News, Ratings, and Charts

DKNG – Sports have made a huge comeback after months-long hiatus. Although there have been a few hiccups, they’ve been able to keep playing through the pandemic with minimal disruptions. Another difference is that sports betting is becoming legalized and normalized across the country. Asa result, DraftKings (DKNG) and Penn National Gaming (PENN) are two of the hottest stocks in the market. But which one is the better buy now? Let’s take a look.

Draftkings, Inc. (DKNG) and Penn National Gaming, Inc. (PENN) are two major companies revolutionizing the sports betting industry. With the return of pro and college football in addition to the NBA and MLB, DKNG and PENN are capitalizing on the opportunity.

DKNG gained 23.4% in the past month, outperforming PENN’s 14.8% returns over this period.  However, in terms of three-month performance, PENN is the clear winner with 137.1% returns versus DKNG’s 73.5%. 

But which stock is the better buy now? Let’s find out.

Latest Movements

DKNG’s unconventional IPO garnered attention from investors from all spheres. It was acquired by Diamond Eagle Acquisition Corporation (DEACU) and SBTech under a Special Purpose Acquisition Company (SPAC) agreement. This allowed the company to bypass the costs and lengthy time frame demanded by a traditional IPO process, leading to a more efficient stock market debut on April 23rd.

The three-way merger with DEACU and SBTech has provided DKNG with the adequate capital flow as well as technical expertise to become an industry leader in sports betting.

DKNG recently announced a public offering of 32 million stocks through a syndicated deal, to raise approximately $1.67 billion. The net proceeds are going toward funding its exclusive partnership deals with various sports organizers and general corporate expenses.

DKNG has entered into exclusive multi-year deals with the Philadelphia Eagles, New York Giants, and ESPN. It also partnered with Colorado Rockies to become the franchise’s Official Daily Fantasy Operator and Official Sports Betting Operator. DKNG also opened Draftkings SportsBook at Mardi Gras Casino in Colorado.

PENN recently launched the Barstool Sportbook app for online sports betting in multiple games, which quickly gained popularity among the masses and rose to the #1 app on the App store. Currently, only functioning in Pennsylvania, PENN is planning to expand the reach of the app across the country. It also partnered with Sportsradar to use real-time data of NFL games on its betting platforms.

PENN also raised $982.10 million through an underwritten public offering of 16.10 million shares, which was closed on September 25th. 

Recent Financial Results

DKNG reported a 23.6% year-over-year increase in revenues to $70.93 million in the second quarter ended June 2020. The company ended the quarter with $1.20 billion in cash holdings and no debt.

PENN’s revenue for the second quarter ended June 2020 was $1.11 billion, indicating a year-over-year decline, due to the adverse impact of the coronavirus pandemic.

Expected Financial Performance

The market expects DKNG’s EPS to rise 32.2% next year, and at a rate of 40% per annum over the next five years. The consensus revenue estimate of $769.27 million for 2021 indicates a 46.2% improvement from the same period last year.

PENN’s EPS is expected to increase at a rate of 42.6% per annum over the next five years. The consensus EPS estimate of $1.36 for 2021 indicates a 125.5% improvement from the year-ago negative values. The market expects PENN’s revenue to rise by 35.3% next year to $4.91 billion.

Thus, PENN is in an advantageous position here.


PENN’s trailing 12-month revenue is 11.53 times what DKNG generates. However, DKNG is more profitable with a gross margin of 56.6% compared to PENN’s 44.4%.

Also, PENN’s 1.2% return on total capital is substantially higher than DKNG’s negative ROTC.


In terms of trailing 12-month Enterprise Value (EV)/Sales, DKNG is currently trading at 50x, 831.1% more expensive than PENN, which is currently trading at 5.37x. DKNG is also more expensive in terms of trailing 12-month Price/Sales (59.25x versus PENN’s 1.95).

DKNG’s 8.27x trailing 12-month price to book ratio is higher than PENN’s 6.26x. 

Thus, PENN is the more economical choice here.

POWR Ratings

Both DKNG and PENN are rated “Buy” in our proprietary POWR Ratings system. Here’s how the four components of overall POWR Rating are graded for both the stocks:

DKNG holds a “B” for Trade Grade and Peer Grade, and “C” for Buy & Hold Grade and Industry Rank. It is currently ranked #1 out of 22 stocks in the Entertainment – Casinos/ Gambling industry.

PENN has an “A” for Trade Grade, “B” for Buy & Hold Grade and Peer Grade, and “C” for Industry Rank. It is currently ranked #2 in the same industry.

The Winner

Though DKNG has been on every investors’ radar since it’s unorthodox IPO, its share price gains are not completely backed by strong financials. PENN’s revenue and EPS growth potential are significantly higher than those of DKNG. Moreover, PENN is relatively cheaper. Hence, investors looking to benefitting from the comeback of the sports season should bet on PENN. 


Want More Great Investing Ideas?

2020 Stock Market Bubble Part 2?

7 Best ETFs for the NEXT Bull Market

5 WINNING Stocks Chart Patterns

DKNG shares were trading at $48.10 per share on Wednesday afternoon, down $3.08 (-6.02%). Year-to-date, DKNG has gained 349.53%, versus a 9.64% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
DKNGGet RatingGet RatingGet Rating
PENNGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

:  |  News, Ratings, and Charts

Bulls in Charge…for Now at Least

Every since the S&P 500 (SPY) made new lows in mid June the bulls have been back in charge. At first it looked like your typical bear market rally. However, there are more and more signals going off that this may be the real deal. As in the new bull market may have arrived. That topic is a big deal as one's outlook, bullish or bearish, weighs heavily on how they construct their portfolio for the days and weeks ahead. That is why we will focus on that topic in today's commentary. Read on below for more…

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

Read More Stories

More DraftKings Inc. Cl A (DKNG) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All DKNG News