Investors in Penn National Gaming (NASDAQ:PENN) should be glad to know that the company’s market footprint is constantly growing. Yet, judging by the recent price action of PENN stock, this growth doesn’t appear to be fully appreciated.
This presents a great opportunity for enterprising investors. A pullback in the stock of a fundamentally sound company should be a reason to add to one’s position, not to panic-sell.
It’s just one piece of good news after another with Penn National Gaming. For instance, the company recently received final approval from the Maryland Lottery and Gaming Control Commission to acquire the operations of Hollywood Casino Perryville.
As we’ll discover, this isn’t the only positive development. With 41 properties across 19 states, and an expanding online presence, there’s a lot to like about Penn National Gaming right now.
PENN Stock at a Glance
If you can believe it, PENN stock was available for $8 during the peak panic of the 2020 Covid-19-induced market crash.
Anyone who bought shares and held them did quite well. The stock price rallied through the remainder of the year and continued climbing in early 2021.
On March 15, PENN stock reached a 52-week high of $142. It’s natural for a stock to pull back after gains of that magnitude, and that’s precisely what happened.
The next three months were challenging as the share price slid, landing at $80 and change on June 14. The bulls should consider $100 and $125 as key levels to watch before eyeing the prior high of $142.
An Omni-Channel Gaming Business
To borrow a phrase from Matt McCall and the InvestorPlace research staff, Penn National Gaming offers the best of both worlds.
This means a sizable stake in both the in-person and online gaming segments.
Regarding the online segment, last year Penn National Gaming acquired a 36% equity interest in digital sports, entertainment, lifestyle and media company Barstool Sports.
Not long ago, the Indiana Gaming Commission approved the company’s application to offer online sports wagering in Indiana. Consequently, Penn National Gaming announced plans to launch its Barstool Sportsbook mobile app in that state.
Launching the mobile Barstool Sportsbook in Indiana will allow Penn National Gaming to offer a number of unique promotional wagers. These include risk-free bets, parlay insurance and an array of wagering options related to the upcoming NBA Playoffs and Indianapolis 500.
And concerning the in-person gaming segment, the company controls properties featuring approximately 50,000 gaming machines, 1,300 table games and 8,800 hotel rooms.
With all of that in mind, we can safely say that Penn National Gaming is an omni-channel business.
The company even established an in-house content development team, called Penn Game Studios. This team’s purpose is to create exclusive iCasino content for its customers.
Tracking the Revenues and Balance Sheet
So far, we’ve learned that Penn National Gaming has an extensive online presence, including its Barstool Sports stake.
We’ve also covered the company’s in-person gaming holdings, as well as Penn National Gaming’s effort to produce exclusive gaming content.
But, does all of this translate to strong revenues? Fortunately, the answer is definitely yes. The data proves this point. For the first quarter of 2021, Penn National Gaming generated a whopping $1.2749 billion in revenues. Moreover, the company reported adjusted EBITDAR (EBITDA minus rent and restructuring costs) of $447 million.
The picture only gets brighter when we discover that Penn National Gaming posted $91 million in quarterly net income. That signifies a 78% increase compared to the first quarter of 2019.
And for folks concerned about the balance sheet, Penn National Gaming is in a firm financial position. Specifically, the company reported having $2.062 billion in cash and cash equivalents at the first quarter’s end.
Additionally, the company has reduced its traditional net debt from $2.103 billion at the end of 2019’s first quarter, to just $353 million at 2021’s first quarter’s end.
It’s possible that PENN stock shed some of its value simply as a natural retracement of its multi-month gains.
So, the stock’s available at a reduced price — and that’s not a bad thing for anyone seeking to invest in an omni-channel gaming-market leader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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