Head to Head Analysis: Inspired Entertainment (NASDAQ:INSE) versus TAKE-TWO INTERACTIVE SOFTWARE (NASDAQ:TTWO)

TAKE-TWO INTERACTIVE SOFTWARE (NASDAQ:TTWO) and Inspired Entertainment (NASDAQ:INSE) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.

Profitability

This table compares TAKE-TWO INTERACTIVE SOFTWARE and Inspired Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TAKE-TWO INTERACTIVE SOFTWARE 12.51% 25.62% 12.80%
Inspired Entertainment -18.71% N/A -8.94%

Earnings & Valuation

This table compares TAKE-TWO INTERACTIVE SOFTWARE and Inspired Entertainment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TAKE-TWO INTERACTIVE SOFTWARE $2.67 billion 4.67 $333.84 million $3.88 28.54
Inspired Entertainment $141.38 million 1.37 -$14.15 million ($0.62) -13.73

TAKE-TWO INTERACTIVE SOFTWARE has higher revenue and earnings than Inspired Entertainment. Inspired Entertainment is trading at a lower price-to-earnings ratio than TAKE-TWO INTERACTIVE SOFTWARE, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

TAKE-TWO INTERACTIVE SOFTWARE has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Inspired Entertainment has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Insider and Institutional Ownership

93.8% of TAKE-TWO INTERACTIVE SOFTWARE shares are owned by institutional investors. Comparatively, 74.7% of Inspired Entertainment shares are owned by institutional investors. 1.1% of TAKE-TWO INTERACTIVE SOFTWARE shares are owned by company insiders. Comparatively, 16.7% of Inspired Entertainment shares are owned 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 Recommendations

This is a summary of current ratings and recommmendations for TAKE-TWO INTERACTIVE SOFTWARE and Inspired Entertainment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TAKE-TWO INTERACTIVE SOFTWARE 0 3 17 0 2.85
Inspired Entertainment 0 0 2 0 3.00

TAKE-TWO INTERACTIVE SOFTWARE currently has a consensus target price of $128.05, suggesting a potential upside of 15.65%. Inspired Entertainment has a consensus target price of $10.00, suggesting a potential upside of 17.51%. Given Inspired Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe Inspired Entertainment is more favorable than TAKE-TWO INTERACTIVE SOFTWARE.

Summary

TAKE-TWO INTERACTIVE SOFTWARE beats Inspired Entertainment on 10 of the 14 factors compared between the two stocks.

About TAKE-TWO INTERACTIVE SOFTWARE

Take-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers worldwide. The company offers its products under the Rockstar Games and 2K labels, as well as under Private Division and Social Point labels. It develops and publishes action/adventure products under the Grand Theft Auto, Max Payne, Midnight Club, and Red Dead names through developing sequels; and offers downloadable episodes, content and virtual currency, and releasing titles for smartphones and tablets. The company also develops brands in other genres, including the L.A. Noire, Bully, and Manhunt franchises. In addition, the company publishes various entertainment properties across platforms and a range of genres, including shooter, action, role-playing, strategy, sports, and family/casual entertainment under the BioShock, Mafia, Sid Meier's Civilization, XCOM series, Borderlands, and Evolve. Further, it publishes sports simulation titles, including NBA 2K series, a basketball video game; and the WWE 2K professional wrestling series. Additionally, the company offers free-to-play mobile games, such as Dragon City and Monster Legends. Its products are designed for console gaming systems, such as Sony's PlayStation 3 and PlayStation 4, and Microsoft's Xbox 360 and Xbox One; and personal computers comprising smartphones and tablets. The company provides its products through physical retail, digital download, online platforms, and cloud streaming services. Take-Two Interactive Software, Inc. was founded in 1993 and is headquartered in New York, New York.

About Inspired Entertainment

Inspired Entertainment, Inc., a business-to-business gaming technology company, supplies virtual sports and server based gaming worldwide. It designs, develops, markets, and distributes a portfolio of games through its digital network architecture to betting offices, casinos, gaming hall and bingo operators, and regulated operators of lotteries, as well as government affiliated and licensed operators. The company also offers gaming software and content to regulated betting operators, lotteries, casinos, online operators, and other gaming and lottery operators. In addition, it provides end-to-end digital gaming solutions on its proprietary and secure network, which accommodates a range of devices, including land-based gaming machine terminals, as well as mobile devices, such as smartphones and tablets, and online computer applications. The company operates approximately 33,000 digital terminals; and supplies its virtual sports products in approximately 35,000 retail channels and approximately 300 Websites. Inspired Entertainment, Inc. was founded in 2002 and is based in New York, New York.

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