Critical Contrast: Party City Holdco (PRTY) and Take-Two Interactive Software (TTWO)

Take-Two Interactive Software (NASDAQ: TTWO) and Party City Holdco (NYSE:PRTY) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.

Analyst Recommendations

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This is a summary of recent recommendations for Take-Two Interactive Software and Party City Holdco, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Take-Two Interactive Software 0 4 18 0 2.82
Party City Holdco 0 3 3 0 2.50

Take-Two Interactive Software presently has a consensus target price of $123.48, indicating a potential upside of 26.20%. Party City Holdco has a consensus target price of $18.17, indicating a potential upside of 14.62%. Given Take-Two Interactive Software’s stronger consensus rating and higher probable upside, analysts clearly believe Take-Two Interactive Software is more favorable than Party City Holdco.

Insider & Institutional Ownership

91.3% of Take-Two Interactive Software shares are owned by institutional investors. Comparatively, 83.6% of Party City Holdco shares are owned by institutional investors. 1.6% of Take-Two Interactive Software shares are owned by insiders. Comparatively, 5.0% of Party City Holdco shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Take-Two Interactive Software has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Party City Holdco has a beta of 2.18, indicating that its stock price is 118% more volatile than the S&P 500.

Profitability

This table compares Take-Two Interactive Software and Party City Holdco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Take-Two Interactive Software 9.43% 27.78% 10.06%
Party City Holdco 9.08% 14.14% 4.18%

Valuation and Earnings

This table compares Take-Two Interactive Software and Party City Holdco’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Take-Two Interactive Software $1.78 billion 6.29 $67.30 million $1.91 51.23
Party City Holdco $2.37 billion 0.80 $215.34 million $1.20 13.21

Party City Holdco has higher revenue and earnings than Take-Two Interactive Software. Party City Holdco 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.

Summary

Take-Two Interactive Software beats Party City Holdco on 10 of the 14 factors compared between the two stocks.

Take-Two Interactive Software Company Profile

Take-Two Interactive Software, Inc. is a developer, publisher and marketer of entertainment for consumers around the world. The Company develops and publishes products through its labels, Rockstar Games and 2K. It operates through publishing segment. It has a portfolio of software content for the hardware platforms in a range of genres, including action, adventure, family/casual, racing, role-playing, shooter, sports and strategy, which it distributes across the world. The Company’s products are designed for console gaming systems, such as PlayStation 3 and PlayStation 4; Xbox 360 and Xbox One, and personal computers, including smartphones and tablets. Rockstar Games is the developer and publisher of Grand Theft Auto, as well as other franchises, including L.A. Noire, Max Payne, Midnight Club and Red Dead. 2K publishes owned and licensed titles across a range of genres. It has internal development studios in Canada, China, Czech Republic, the United Kingdom and the United States.

Party City Holdco Company Profile

Party City Holdco Inc. is a holding company with no operating assets or operations. As of December 31, 2016, the Company owned PC Nextco Holdings, LLC (PC Nextco), which owned PC Intermediate Holdings, Inc. (PC Intermediate). As of December 31, 2016, PC Intermediate owned Party City Holdings Inc. (PCHI). PCHI or its direct or indirect subsidiaries conduct all of its operating businesses. The Company operates through two segments: Retail and Wholesale. Its retail operations generate revenue primarily through the sale of its Amscan, Designware, Anagram and Costumes USA party supplies through its Party City stores, Halloween City stores and PartyCity.com. Its wholesale revenues are generated from the sale of party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons and stationery.

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