Momentum Play: Penn National Gaming

Penn National Gaming, Inc. (PENN) just hit a new 52-week high on the heels of a solid 12%, Q3 earnings surprise. With estimates on the rise and a bullish growth projection, this Zacks #1 rank stock offers a hearty helping of momentum.

Company Description

Penn National Gaming, Inc. and its subsidiaries own and manage gaming properties in the United States. The company was founded in 1982 and has a market cap of $2.36 billion.

Although PENN has been trending higher since finding a short-term bottom in July, shares took a nice jump on Oct 22 after the company reported strong Q3 results that once again beat expectations.

Third-Quarter Results

Revenue for the period was up 3% from last year to $638 million. Earnings however came in even better at 37 cents, 12% ahead of the Zacks Consensus Estimate and almost double last year’s 20 cents.

Share Buy Backs

Penn has also been busy buying returning value to its shareholders, repurchasing over 1.1 million shares of its common stock during the quarter at an average price of $23.21. That purchase follows Penn’s Q2 buyback of 409,000 shares at an average price of $24.25.

Balance Sheet Strengthening

PENN was also busy strengthening its balance sheet during the quarter, reducing its total debt load by $277 million to $2.1 billion against $398 million in cash and equivalents. Its debt-to-equity ratio of 110% is well ahead of its peer average of 148%.


We saw some decent movement in estimates off the good quarter, with the current year adding 8 cents to $1.28 and the next year adding 2 cents to $1.55, a bullish 21% growth projection.


Although the company’s forward P/E of 26X might seem pricey on first glance, it’s actually a discount to its peer average of 39X.

6-Month Chart

PENN has been trending higher since bottoming out in July, recently getting a nice boost from the strong quarter. The stochastic below the chart is signaling that shares are trading safely away from over-bought territory. Look for support from the trend line and short-term low an any weakness, take a look below.

PENN NATL GAMNG (PENN): Free Stock Analysis Report

About Michael Vodicka 49 Articles

Affiliation: Zacks Investment Research

Visit: Zacks Investment Research

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