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Penn National Gaming Banks on Sports Betting for Growth

Zacks Equity Research

Penn National Gaming, Inc.’s PENN strategic partnerships with DraftKings, PointsBet, theScore and The Stars Group, strong brand presence and cost savings efforts bode well. Although the industry has witnessed a sharp decline of 13.6% in the past three months, the stock has gained 1.3%.

Let’s delve deeper and find out the factors, which are likely to boost the company’s performance in the near term.

Key Catalysts

Most of the gaming companies are now banking on sports betting, following its legalization outside Nevada. Penn National has announced historic strategic partnerships with DraftKings, PointsBet, theScore and The Stars Group. These partnerships will help the company to maximize sports betting and iGaming across 19 states. DraftKings will cover Florida, Missouri, Ohio, Pennsylvania and West Virginia for ten years.

Being a leading gaming company in the United States, Penn National is known for its consistent business strategies and strong brand recognition. Through various acquisitions and divestitures, the company’s presence became largely widespread. Even then, Penn National is still continuing to expand and leverage its brand power.


Penn National has impressed investors with its robust revenue growth. The company’s top line had increased 14%, 3.7% and 6.9% in 2018, 2017 and 2016, respectively. The uptrend continued in first and second-quarter 2019 as the company’s revenues increased 36.4% and 28.8%, respectively, on a year-over-year basis. Given increased demand for leisure services and the company’s enormous scale, we believe that the top line will continue to grow in the near term.

For the third quarter, net revenues are expected to be $1,370.5 million, reflecting a 73.5% improvement from the year-ago quarter. Full-year revenues are anticipated to be $5,338 million, up from the previously anticipated $5,173.1 million. Revenues are projected to rise 48.8% year over year. Adjusted earnings for the third quarter are predicted to be 42 cents compared with 38 cents registered in the prior-year quarter.

Over the past 90 days, the Zacks Consensus Estimate for current and next-year earnings has increased 13 cents each to $1.57 and $2.18.

Penn National Gaming, which shares space with Boyd Gaming Corporation BYD and Caesars Entertainment Corporation CZR, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another Key Pick

A stock, which warrants a look in the same space, is Monarch Casino & Resort, Inc. MCRI carrying a Zacks Rank #2. Monarch Casino & Resort has an impressive long-term earnings growth rate of 12.5%.

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