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Penn National Gaming, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year

A week ago, Penn National Gaming, Inc. (NASDAQ:PENN) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$1.1b, some 2.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.93, 76% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Penn National Gaming

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Taking into account the latest results, the most recent consensus for Penn National Gaming from 14 analysts is for revenues of US$4.97b in 2021 which, if met, would be a major 28% increase on its sales over the past 12 months. Penn National Gaming is also expected to turn profitable, with statutory earnings of US$1.48 per share. In the lead-up to this report, the analysts had been modelling revenues of US$4.98b and earnings per share (EPS) of US$1.34 in 2021. So the consensus seems to have become somewhat more optimistic on Penn National Gaming's earnings potential following these results.

The consensus price target was unchanged at US$75.46, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Penn National Gaming, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$31.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Penn National Gaming's growth to accelerate, with the forecast 28% growth ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Penn National Gaming to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Penn National Gaming following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Penn National Gaming. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Penn National Gaming analysts - going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Penn National Gaming has 3 warning signs we think you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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