Why Are We Comparing Penn National Gaming And DraftKings?
We compare stocks which share one or more similar characteristicsThis is because the decision to invest often come down to finding the best stocks within the ambit of certain characteristics that suit an investment styleWe compare Penn National Gaming vs. DraftKings because they both are sector peers; for right investment exposure to Consumer Discretionary sector, it makes sense to compare its constituents and pick the best ones
 How Do We Arrive At A Decision?
We favor stocks that offer meaningfully greater expected return in the next 3 yearsThese returns are calculated based on our revenue forecast and Price to Sales Ratio (P/S) scenarios consideredSimilar Price To Sales Ratio (P/S) scenarios are considered for both stocks and each scenario is weighted equally for a given stock
 How Do We Forecast Revenue?
We have different methodologies for companies negatively impacted by Covid, and for companies not impacted or positively impacted by CovidDifferent methodologies are essential to capture recovery in case of negative impactFor companies negatively impacted by covid, we consider quarterly revenue recovery trajectory to forecast recovery to pre-covid revenue run rate, and beyond recovery point, we apply average annual growth observed in 3 years prior to covid to simulate return to normal conditionsFor companies registering positive revenue growth during covid, we consider average annual growth prior to covid with certain weightage to growth during covid and last 12 months
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