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3 Reasons Value Stock Investors Will Love Penn National Gaming (PENN)
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Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Penn National Gaming Inc. (PENN - Free Report) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for PENN’s status as a solid value stock below:
Price to Forward Sales for Penn National Gaming
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.37, PENN investors are paying 37 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 1.40, and it is safe to say that PENN is undervalued compared to many of its peers on this important metric.
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.
The P/CF ratio for PENN comes in at 3.17, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 5.47, so Penn National Gaming has its peers beat in this regard too.
PENN Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow PENN stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Penn National Gaming now.
Over the past 60 days, 1 earnings estimate has gone higher compared to none lower for the full year, while we are also seeing that 1 estimate has move upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate, as 60 days ago, PENN was expected to post earnings of 85 cents per share for the full year, though today it looks to have EPS of 88 cents for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have PENN as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep PENN on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
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3 Reasons Value Stock Investors Will Love Penn National Gaming (PENN)
Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Penn National Gaming Inc. (PENN - Free Report) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for PENN’s status as a solid value stock below:
Price to Forward Sales for Penn National Gaming
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.37, PENN investors are paying 37 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 1.40, and it is safe to say that PENN is undervalued compared to many of its peers on this important metric.
PENN NATL GAMNG PS Ratio (TTM)
PENN NATL GAMNG PS Ratio (TTM) | PENN NATL GAMNG Quote
Price/Cash Flow for Penn National Gaming
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.
The P/CF ratio for PENN comes in at 3.17, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 5.47, so Penn National Gaming has its peers beat in this regard too.
PENN Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow PENN stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Penn National Gaming now.
Over the past 60 days, 1 earnings estimate has gone higher compared to none lower for the full year, while we are also seeing that 1 estimate has move upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate, as 60 days ago, PENN was expected to post earnings of 85 cents per share for the full year, though today it looks to have EPS of 88 cents for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have PENN as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep PENN on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>