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Factors Setting the Tone for Penn National (PENN) Q4 Earnings

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Penn National Gaming, Inc. (PENN - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 3, 2022, before the opening bell. In the previous quarter, the company reported a negative earnings surprise of 38.1%.

How Are Estimates Placed?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 46 cents, indicating a surge of 557.1% from 7 cents reported in the year-ago quarter.

For revenues, the consensus mark is pegged at $1,509 million. The projection suggests an increase of 46.9% from the year-ago quarter’s reported figure.

Penn National Gaming, Inc. Price and EPS Surprise

Penn National Gaming, Inc. Price and EPS Surprise

Penn National Gaming, Inc. price-eps-surprise | Penn National Gaming, Inc. Quote

Let's take a look at how things have shaped up in the quarter.

Factors to Note

Penn National’s fourth-quarter performance is likely to have benefited from the expansion of Barstool Sports betting app, differentiated omnichannel strategy and disciplined marketing approach. During the previous quarter’s earnings call, the company revealed that it is benefiting from retail Barstool Sportsbook as it continues to stimulate database growth. Monthly active users for Barstool Sportsbook and casino (as of Sep 30, 2021) have increased more than six times compared with September 2020 levels. With strong retention rates and high adoption among casual bettors, the momentum is likely to continue in the fourth quarter as well. Emphasis on cross-sell opportunities, the rollout of 3C’s technology and product development (including unique promotions, exclusive betting features, branded merchandise, and VIP Barstool experiences) are likely to have driven the fourth-quarter top line.

Increased visitation by younger demographics is likely to have boosted gaming and food and beverage spending in the fourth quarter. The Zacks Consensus Estimate for fourth-quarter gaming revenues is pegged at $1,229 million, suggesting an improvement of 37.3% year over year. The consensus mark for food, beverage and other revenues is pegged at $262 million, suggesting growth of 98.5% from the prior-year quarter’s figures.

Higher revenues in the Northeast, West, Midwest, Other and South segments might have contributed to the company’s fourth-quarter performance. The Zacks Consensus Estimate for fourth-quarter revenues in the Northeast, West and Midwest segments is currently pegged at $639 million, $145 million and $274 million, indicating a surge of 35.7%, 81.3% and 45.7%, respectively, from the year-ago quarter’s reported figure. The consensus mark for Other and South segments is pegged at $110 million and $315 million, calling for growth of 107.5% and 26.5%, respectively, from the prior-year quarter’s levels.

Delay of product launches in Ontario is likely to have affected the company’s performance in the fourth quarter. Also, increased expenses related to new state launches of the Barstool Sportsbook app, marketing initiatives and investment projects are likely to have dented the company’s earnings in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Penn National this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.

Earnings ESP: Penn National has an Earnings ESP of -5.95%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #4 (Sell).

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat:

Oxford Industries, Inc. (OXM - Free Report) has an Earnings ESP of +2.97% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Oxford Industries have gained 25.7% in the past year. OXM’s earnings topped the consensus mark thrice but missed the same on one occasion, the average surprise being 96.7%.

PlayAGS, Inc. (AGS - Free Report) has an Earnings ESP of +42.71% and a Zacks Rank #2.

Shares of PlayAGS have gained 39.7% in the past year. AGS’ earnings topped the consensus mark thrice but missed the same on one occasion, the average surprise being 33.3%.

Boyd Gaming Corporation (BYD - Free Report) has an Earnings ESP of +2.61% and a Zacks Rank #3.

Shares of Boyd Gaming have gained 27.7% in the past year. BYD’s earnings topped the consensus mark in all of the trailing four quarters, the average surprise being 56.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.