Penn National Gaming, Inc. (PENN - Free Report) is poised to benefit from its Barstool Sports partnership and cost-saving efforts. Also, increased focus on sport betting and iGaming bodes well.
Let us delve deeper into factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Being a leading gaming company in the United States, Penn National is known for its solid business strategies and brand recognition. Notably, Penn National, which shares space with Caesars Entertainment Corporation (CZR - Free Report) , MGM Resorts International (MGM - Free Report) and Red Rock Resorts, Inc. (RRR - Free Report) , continues to focus on acquisitions to expand presence and improve revenue yields.
In January 2020, Penn National reached an agreement to acquire a 36% interest in Barstool Sports for nearly $163 million. Per the agreement, Penn National will be the gaming partner to Barstool Sports, a leading digital sports media company. Penn National will launch Barstool Sportsbooks across the United Sates in the coming quarters and mobile sports betting app Barstool Sportsbook. Notably, the partnership provides access to a database of 66 million sports enthusiasts (or Barstool loyalist), out of which 60% are into sports betting while the remaining are avid betters.
Meanwhile, 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.
Despite the pandemic, the company has announced that it will continue to invest in projects, which will generate EBITDA in the short term. The company is confident about its long-term growth, which will be supported by differentiated omni-channel approach.
Apart from this, Penn National engaged third-party consultants to help the company validate and quantify a set of strategic initiatives that are expected to improve its industry-leading property level operating margins in the coming years. This effort encompasses both revenue and cost-saving initiatives that will reap recurring benefits over the years.
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