Penn Entertainment Stock Could Be the Winning Bet Among Gaming Stocks

Published on: August 28, 2022, 05:02h.

Last update on: August 28, 2022, 05:02h.

Penn Entertainment (NASDAQ:PENN) stock is down 38% year-to-date, a much worse decline than the MVIS Global Gaming Index, but some market watchers believe the giant’s stock casinos offer rebound potential.

Penn stock
Jay Snowden, CEO of Penn Entertainment. Some market watchers believe the stock is poised for gains. (Image: Bloomberg)

The Pennsylvania-based company is the largest regional casino operator in the United States and it does not run land-based gaming properties outside of that country. This is a plus at a time when the dollar is strong and some competitors are struggling with ongoing COVID-19 protocols in Macau. Formerly known as Penn National Gaming, the company operates 44 casinos in 20 states. Additionally, Penn’s second quarter results and full year outlook are attractive.

Revenue rose 5.4% year-over-year (YoY) to $1.63 billion, beating consensus estimates of $1.61 billion. PENN reaffirmed its full-year 2022 revenue guidance of $6.15 billion to $6.55 billion from analyst consensus estimates of $6.36 billion,” noted Schaeffer’s Investment Research.

Conversely, a falling stock market, rising interest rates and inflation showing no signs of slowing in the near term are among the factors that analysts and economists say are weighing on confidence and consumer spending. This is potentially worrisome for casino operators, who are the epitome of cyclical consumer names.

Penn Interactive a rising force

Penn Interactive, the company’s online gaming unit, is on the rise and is touting itself as another possible catalyst for the title.

In a similar vein, the company announced earlier this month that it was exercising its rights to acquire the percentage of Sport bar stool he did not previously own, meaning he will own the entire media entity of David Portnoy when the deal closes in February.

Barstool Sportsbook has yet to reach the heights of FanDuel or DraftKings. But Penn’s Online Sportsbook Leverages Portnoy and Others Stool personalities to acquire younger customers profitably – a significant trait, as some rivals spend a lot on marketing.

“The combination of physical locations and interactive online games enables a synergistic network effect where customers can earn comps and prizes while staying connected to the brand from virtually anywhere,” adds Schaeffer’s. “PENN is able to reach them, or rather PENN customers are able to reach them through multiple channels, cashless, cardless and contactless.”

Massachusetts Could Power Penn Stock

The recent legalization of sports betting in Massachusetts, where Penn operates slot machines – only Plainridge Park Casino (PPC), could be another catalyst for the title in the long run.

“There will be six mobile betting licenses and Penn is very likely to claim one. He currently owns a horse racing and slot machine parlor in Plainview, Massachusetts which may benefit from the addition of a bookmaker. Plus, their Bar Stool Sports app was born in Boston, making it hugely popular with college students and millennials,” Schaeffer’s concludes.

Eighteen analysts cover Penn Entertainment’s stock with 13 rating the stock “strong buy” or “buy”. The average price target on the gambling stock is $50.24, implying a significant upside from the August 26 close of $32.18.