The stock has rewarded the investors over the last two years with a 87% rise. The recent upgrade by Wells Fargo has had a positive effect on the sentiments for the stock. The report by Wells Fargo expresses positive sentiments about the prospects of Penn and the industry environment. They recommend to buy the stock with a price target of $16-$18. This indicates a potential upside of around 10-23% from the current levels at the low and high end of the target range. The analyst consider the stock to be undervalued because of an overly pessimistic industry view, confusion over how to value PENN post the spin-off, and a misconception that the company's cash flows are now significantly more volatile than its peers. They believe that the current valuations overlook Penn's options to create value through unit growth, supported by its balance sheet and strong free cash flow. About the industry, 'the estimates and industry trends are expected to stabilize next year because of the limited supply growth until 2016, and well known risks in the Midwest'. The company is profitable on a net basis, which itself is a positive factor compared to many peers who are reporting losses continuously. The trailing P/E is around 12.95, and the price to sales ratio is 0.38. The stock is trading at half its book value. Leverage is high, but that is the case with most players. The entire industry is highly leveraged as it depends on capital investments for acquiring real estate etc. It also needs funds for acquisitions in emerging segments. Social casino has seen some activity with company's like Caesar (CZR) and MGT Capital Investments (MGT) making acquisition to gain access to this fast growing segment. So Penn appears to be relatively a good bet though one needs to keep the absolute valuations in mind.