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Penn National (PENN) Q3 Earnings & Revenues Miss Estimates

Zacks Equity Research

Penn National Gaming, Inc. PENN reported third-quarter 2019 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate. Notably, the top line missed the consensus mark in five of the trailing six quarters. Following the quarterly results, shares of the company declined 2.5% on Oct 31.

Adjusted earnings came in at 38 cents per share, lagging the Zacks Consensus Estimate of 41 cents. Notably, the figure was flat year over year. The bottom line was also lower than the company’s guidance of 42 cents. Net revenues totaled $1,354.5 million, which missed the consensus mark of $1,370 million but surged 71.5% from the year-ago quarter number.

The Northeast segment reported revenues of $628.9 million, up 42.5% year over year. The West, Midwest and South segments’ revenues came in at $161.5 million, $275.8 million and $276.6 million, up 74.4%, 48.8% and 357.9%, respectively, year over year. Meanwhile, the Other segment reported revenues of $12.4 million, up 25.5% year over year.

Penn National Gaming, Inc. Price, Consensus and EPS Surprise


Penn National Gaming, Inc. Price, Consensus and EPS Surprise

Penn National Gaming, Inc. price-consensus-eps-surprise-chart | Penn National Gaming, Inc. Quote

Let us take a closer look at the numbers

Inside the Headlines

Penn National’s income from operations in the third quarter totaled $180.5 million, up from $124.4 million in the prior-year quarter. Adjusted EBITDAR increased 21.8% from the year-ago quarter to $394.5 million. Moreover, adjusted EBITDAR margin expanded 100 basis points to 30.1%.

Meanwhile, the traditional net debt ratio was 2.5x, and net leverage on a lease-adjusted basis was 5.6x.

Other Financial Information

At the end of the third quarter, cash and cash equivalents decreased to $406.9 million compared with $479.6 million at the end of Dec 31, 2018. Further, the bank debt as of Sep 30, 2019, were $1,966.3 million, up from $1,907.9 million at the end of Dec 31, 2018.

Q4 and 2019 Guidance

For the fourth quarter, net revenues are expected to be $1,350.7 million, reflecting an improvement of 16.9% from the year-ago quarter. Full-year revenues are anticipated to be $5,310.9 million, down from the previously projected $5,338 million. Revenues are envisioned to rise 48% year over year.

Adjusted earnings for the fourth quarter are anticipated to be 37 cents against a loss of 37 cents in the prior-year quarter. Meanwhile, earnings for 2019 are anticipated to be $1.53, down from prior estimate of $1.57. In 2018, the company reported earnings of 93 cents.

Other Developments

Penn National, which is in the process of integrating Pinnacle properties, expects to achieve at least $120 million of cost synergies by 2020 end, with at least $60 million in 2019 and $65 million by 2020.

Moreover, the company’s development projects in Pennsylvania, which include the $120 million Hollywood Casino York and the $111 million Hollywood Casino Morgantown, are on track.

Zacks Rank

Penn National — which shares space with Wynn Resorts WYNN, Caesars Entertainment Corporation CZR and Las Vegas Sands Corp. LVS in the Zacks Gaming industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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