Back to top

Aggressive Growth

Pinnacle Entertainment, Inc. (PNK - Snapshot Report) has been on a roll with 4 straight earnings surprises. Profits are rising and should continue next year.

With estimates rising and shares plunging, the stock is showing fantastic value along with the growth outlook.

Company Description

Pinnacle Entertainment owns and operates 7 casinos in Louisiana, Missouri, Indiana, and Nevada. The company also has a racetrack in Ohio.

A Winning Quarter

On Aug 3 Pinnacle reported a 9.3% increase in second-quarter revenue, up to $299.1 million. Operating income jumped to $31.7 million from a $15.7 million loss a year ago.

Earnings came in at $0.17 per share, up from a $0.33 loss a year ago. That mark was also 9 cents better than the Zacks Consensus Estimate. The company now has 4 consecutive earnings surprises.

During the quarter Pinnacle invested in the hot Southeast Asian gaming market. The company invested in a company that is developing areas of in Vietnam. Additionally, the company still has a Baton Rouge casino and other expansion projects in its pipeline.

Outlook Up Sharply

Analysts quickly raised their full-year estimates on the earnings release. The Zacks Consensus Estimate for 2011 is up 18 cents, to $0.52. Next year's estimates are averaging $0.55, up 14 cents.

Given the $0.20 loss per share in 2010, this is quite a turnaround story.


Shares of PNK are going for roughly 16 times the 2011 estimates, which put the PEG ratio at 0.8 times. So, the 22% expected earnings growth is currently priced at a discount.

The price to sales is at 0.45 and the stock is going for its book value.

The Chart

Price action on PNK has been downright scary though. You will have to ask yourself how much risk you are willing to take on this one, but at these levels rolling the dice on this Zacks #1 Rank (Strong Buy) might not be a bad idea.

Pinnacle Entertainment, Inc. - ticker PNK>

Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%