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Penn National (PENN) Stock Up 208% YTD: More Upside Left?

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Zacks Equity Research
·3 min read
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Penn National Gaming, Inc. PENN is likely to benefit from its sports betting, iGaming and acquisition initiatives. However, dismal traffic stemming from the coronavirus pandemic is a concern.

Let us discuss the factors that highlight why investors should hold on to the stock for the time being.

Growth Catalysts

Despite the coronavirus pandemic, Penn National announced that it will continue to invest in projects that will generate EBITDA in the short term. The company is optimistic about its long-term growth, which will be supported by differentiated omni-channel approach.

During the coronavirus-induced shutdown, the company introduced real money iCasino product called Hollywoodcasino.com. Since then, 20,000 customers have been engaged on this online platform. Going forward, the company intends to make it part of the Barstool Sportsbook app, thereby providing significant organic customer acquisition and cross-sell opportunities.

Also, the company plans to launch standalone Barstool branded entertainment destinations, thereby acting as a virtual sports books, where sports betting is allowed. It also plans to launch Barstool Sportsbook app and new iCasino products in Michigan, pending final regulatory approval.

Notably, the company continues to evolve toward new generation of cordless, cashless and contactless technology, collectively known as 3C’s. Amid the pandemic, such initiatives are likely to improve efficiency and customer service that will boost the top line.

Meanwhile, Penn National banks on its acquisition strategies to expand its presence as well as improve revenue yields. During the third quarter, the company exercised the option to acquire the operating assets of Hollywood Casino Perryville in Maryland from GLPI that is slated to be completed by the end of 2020. With this, the company will have market access to leading 20 states by 2021.

So far this year, the company’s stock has surged 208.2% compared with the industry’s 1.4% growth.


Penn National financials in 2020 are likely to be affected by the outbreak of coronavirus. Even though the company resumed operations at majority of its gaming properties, dismal traffic is expected due to the social distancing protocols. Moreover, the pandemic has dramatically reduced travel as well as demand for casino gaming and related amenities. If the virus is not contained, further chances of temporary suspension of operations cannot be ruled out.

Owing to the uncertainty of the crisis, the company has not only withdrawn 2020 guidance but also suspended quarterly dividend payouts.

Zacks Rank & Key Picks

Penn National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Consumer Discretionary sector include YETI Holdings, Inc. YETI, Boyd Gaming Corporation BYD and Monarch Casino & Resort, Inc. MCRI. YETI Holdings sports a Zacks Rank #1, while Boyd Gaming and Monarch Casino carry a Zacks Rank #2 (Buy).

YETI Holdings has a three-five year earnings per share growth rate of 18.3%.

Earnings for Boyd Gaming and Monarch Casino are expected to surge 1,230.2% and 179.3%, respectively, in 2021.

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Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
Monarch Casino & Resort, Inc. (MCRI) : Free Stock Analysis Report
YETI Holdings, Inc. (YETI) : Free Stock Analysis Report
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