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Here's Why Investors Should Retain Penn National (PENN) Stock
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Penn National Gaming, Inc. (PENN - Free Report) is likely to benefit from the strategic partnerships, Barstool Sports expansion and 3C’s initiatives. Also, an emphasis on new game additions bodes well. However, a decline in traffic from pre-pandemic levels and stiff competition from peers are a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Penn National is collaborating with various gaming companies to leverage its unique brands, cater to large audiences and fulfill commitments to sports fans. The company is optimistic about the immense brand value of Barstool and theScore. The acquisition of theScore, which is the strongest sports brand in Canada, will automatically drive Penn National’s brand expansion in the country. Along with amplifying the company’s brand value, the buyout will help cross-promote and cross-market between two large brands. Recently, theScore announced an exclusive 10-year gaming partnership with the Toronto Blue Jays. The deal permits theScore Bet national marketing rights across all gaming categories, including sports betting, casino, online casino and fantasy sports.
Penn National continues to focus on the Barstool Sports expansion across the United States. The company’s Barstool Sportsbooks and iCasino offerings in Michigan, New Jersey and West Virginia continue to drive performance. The company also revealed that it is benefiting from retail Barstool Sportsbook, which continues to stimulate database growth and increases the frequency of visitation in the younger segments. Going forward, the company is confident about its long-term growth that will be supported by a differentiated omnichannel approach. Also, it stated plans to transition the Barstool Sportsbook to the theScore's PAM and trading platform in the third quarter of 2023. The company anticipates the initiative to pave the path for meaningful cost and revenue synergy opportunities.
Meanwhile, the company emphasizes on new game additions, creative marketing and leveraging the casino database to boost the Barstool-branded iCasino business. During the fourth quarter of 2021, the company boosted its iCasino offerings by unveiling its first in-house developed games. Post the launch, the company witnessed sequential improvements in handle and revenues for the Barstool Casino. Going forward, the company intends to capitalize on cross-sell opportunities from the Barstool audience derived from the leverage from Penn Game Studios and game development initiatives (like Barstool Blackjack and Barstool Slots).
Penn National continues to evolve toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution not only removes friction from transactions and reduces wait times but also bolsters its marketing capabilities. The initiative and the company’s differentiated omnichannel strategy have paved the path for improved efficiency and customer service, thereby enhancing the top line. Currently, 3C's are live in all of Pennsylvania properties and at nine properties in three states. Backed by solid customer acceptance and its supporting role in the omnichannel business approach, the company expects to roll out 3Cs technology in an additional 14 properties in eight states over the next two quarters. However, it is subject to regulatory approvals.
Concerns
Image Source: Zacks Investment Research
Shares of Penn National have declined 60.3% in the past year compared with the industry’s 55.6% fall. The dismal performance was caused by the coronavirus crisis. During first-quarter 2022, the company’s West segment’s operating results were negatively impacted by the temporary closure of the Zia Park property as well as COVID-related restrictions. Although the company resumed operations in all of its properties, traffic is still below pre-pandemic levels. Given the uncertainty revolving around the crisis, chances of operational restrictions (imposed by governmental authorities), reimposing stay-at-home orders and travel restrictions cannot be ruled out.
The company continuously faces intense competition from various casinos, video lottery, gaming at taverns and other Internet wagering services.
Bluegreen Vacations sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has surged 39.8% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Funko carries a Zacks Rank #1. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have declined 6.1% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.
Civeo sports a Zacks Rank #2 (Buy) at present. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have soared 58.1% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and EPS suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Penn National (PENN) Stock
Penn National Gaming, Inc. (PENN - Free Report) is likely to benefit from the strategic partnerships, Barstool Sports expansion and 3C’s initiatives. Also, an emphasis on new game additions bodes well. However, a decline in traffic from pre-pandemic levels and stiff competition from peers are a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Penn National is collaborating with various gaming companies to leverage its unique brands, cater to large audiences and fulfill commitments to sports fans. The company is optimistic about the immense brand value of Barstool and theScore. The acquisition of theScore, which is the strongest sports brand in Canada, will automatically drive Penn National’s brand expansion in the country. Along with amplifying the company’s brand value, the buyout will help cross-promote and cross-market between two large brands. Recently, theScore announced an exclusive 10-year gaming partnership with the Toronto Blue Jays. The deal permits theScore Bet national marketing rights across all gaming categories, including sports betting, casino, online casino and fantasy sports.
Penn National continues to focus on the Barstool Sports expansion across the United States. The company’s Barstool Sportsbooks and iCasino offerings in Michigan, New Jersey and West Virginia continue to drive performance. The company also revealed that it is benefiting from retail Barstool Sportsbook, which continues to stimulate database growth and increases the frequency of visitation in the younger segments. Going forward, the company is confident about its long-term growth that will be supported by a differentiated omnichannel approach. Also, it stated plans to transition the Barstool Sportsbook to the theScore's PAM and trading platform in the third quarter of 2023. The company anticipates the initiative to pave the path for meaningful cost and revenue synergy opportunities.
Meanwhile, the company emphasizes on new game additions, creative marketing and leveraging the casino database to boost the Barstool-branded iCasino business. During the fourth quarter of 2021, the company boosted its iCasino offerings by unveiling its first in-house developed games. Post the launch, the company witnessed sequential improvements in handle and revenues for the Barstool Casino. Going forward, the company intends to capitalize on cross-sell opportunities from the Barstool audience derived from the leverage from Penn Game Studios and game development initiatives (like Barstool Blackjack and Barstool Slots).
Penn National continues to evolve toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution not only removes friction from transactions and reduces wait times but also bolsters its marketing capabilities. The initiative and the company’s differentiated omnichannel strategy have paved the path for improved efficiency and customer service, thereby enhancing the top line. Currently, 3C's are live in all of Pennsylvania properties and at nine properties in three states. Backed by solid customer acceptance and its supporting role in the omnichannel business approach, the company expects to roll out 3Cs technology in an additional 14 properties in eight states over the next two quarters. However, it is subject to regulatory approvals.
Concerns
Image Source: Zacks Investment Research
Shares of Penn National have declined 60.3% in the past year compared with the industry’s 55.6% fall. The dismal performance was caused by the coronavirus crisis. During first-quarter 2022, the company’s West segment’s operating results were negatively impacted by the temporary closure of the Zia Park property as well as COVID-related restrictions. Although the company resumed operations in all of its properties, traffic is still below pre-pandemic levels. Given the uncertainty revolving around the crisis, chances of operational restrictions (imposed by governmental authorities), reimposing stay-at-home orders and travel restrictions cannot be ruled out.
The company continuously faces intense competition from various casinos, video lottery, gaming at taverns and other Internet wagering services.
Zacks Rank & Key Picks
Penn National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation , Funko, Inc. (FNKO - Free Report) and Civeo Corporation (CVEO - Free Report) .
Bluegreen Vacations sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has surged 39.8% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Funko carries a Zacks Rank #1. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have declined 6.1% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.
Civeo sports a Zacks Rank #2 (Buy) at present. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have soared 58.1% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and EPS suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.