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

10 Best POWR Ratings Stocks

Investors love using our POWR Ratings to track down stocks likely to outperform the S&P 500 (SPY). However, on any given day there are over 1,300 that are Buy rated. This leads customers to reach out to us to discover which are the BEST of these stocks. Today I share the answer including details on the current 10 best POWR Ratings stocks. Get the rest below...

:  |  News, Ratings, and Charts

Are Stocks Ready to Break to New Highs?

The stock market (SPY) is on a 5 day winning streak and now less than 1% away from the all time highs. This quickly shakes off weeks of painful pullbacks and volatility. Is the market truly ready to ascend to new heights or is this another fake out before the next leg lower? Find out the rest below...

:  |  News, Ratings, and Charts

TTSH is this Week’s Featured Stock 

The Tile Shop Holdings (TTSH) is a leading specialty retailer of manufactured and natural stone tiles. The company has staged an impressive earnings turnaround. Read more to find out why the stock is a good buy into year-end.

:  |  News, Ratings, and Charts

Buy These 3 Tech Stocks Before They Soar Further

Tech stocks, which were underperformers at the start of the year, have made their way back as investors have been buying on the dip. Many of these stocks, which include Applied Materials Inc. (AMAT), KLA Corporation (KLAC), and Amdocs Limited (DOX) are currently in an uptrend and are expected to continue this momentum.

:  |  News, Ratings, and Charts

TTSH is this Week’s Featured Stock 

The Tile Shop Holdings (TTSH) is a leading specialty retailer of manufactured and natural stone tiles. The company has staged an impressive earnings turnaround. Read more to find out why the stock is a good buy into year-end.

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