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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 Barstool Sports expansion, new game additions and 3C’s initiatives. Emphasis on the transition of Barstool Sportsbook to theScore player account management and trading platform bodes well. However, inflationary pressures are a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Penn National continues to focus on the Barstool Sports expansion across the United States. The company’s Barstool Sportsbooks in Louisiana 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. The company is confident about its long-term growth that will be supported by a differentiated omnichannel approach. Also, it stated plans to launch Barstool Sportsbook in Kansas, Ohio and Massachusetts.
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. On Apr 4, 2022, the company launched theScore Bet mobile app in Ontario, Canada. The company stated progress related to the transition of Barstool Sportsbook (in the U.S.) to theScore player account management and trading platform. The company anticipates the initiative to pave the path for meaningful cost and revenue synergy opportunities. It expects to complete the process by third-quarter 2023.
The company emphasizes on new game additions, creative marketing and leveraging the casino database to boost the Barstool-branded iCasino business. During the second quarter of 2022, the company launched 97 new third-party slot and table game offerings across its iCasino platform. Also, it emphasized on its pipeline of future customized and third-party iCasino content for both Barstool and theScore Bet. 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 12 properties by 2022 end. However, it is subject to regulatory approvals.
Concerns
Image Source: Zacks Investment Research
Shares of Penn National have declined 61.6% in the past year compared with the industry’s 49.7% fall. The dismal performance was caused by the coronavirus crisis. Although the company resumed operations in all of its properties, traffic is still below pre-pandemic levels. Given the uncertainty around the crisis, chances of operational restrictions (imposed by governmental authorities), reimposing stay-at-home orders and travel restrictions cannot be ruled out. This and a rise in gas prices and other inflationary pressures are a concern.
Marriott Vacations sports a Zacks Rank #1. VAC has a trailing four-quarter earnings surprise of 13.9%, on average. The stock has declined 7% in the past year.
The Zacks Consensus Estimate for VAC’s current financial year sales and EPS indicates an increase of 19.7% and 131.4%, respectively, from the year-ago period’s reported levels.
Marriott carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has increased 16% in the past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.7% and 102.8%, respectively, from the year-ago period’s reported levels.
Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 4.8% in the past year.
The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 21.9% and 19.6%, respectively, from the year-ago period’s reported 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 Barstool Sports expansion, new game additions and 3C’s initiatives. Emphasis on the transition of Barstool Sportsbook to theScore player account management and trading platform bodes well. However, inflationary pressures are a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Penn National continues to focus on the Barstool Sports expansion across the United States. The company’s Barstool Sportsbooks in Louisiana 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. The company is confident about its long-term growth that will be supported by a differentiated omnichannel approach. Also, it stated plans to launch Barstool Sportsbook in Kansas, Ohio and Massachusetts.
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. On Apr 4, 2022, the company launched theScore Bet mobile app in Ontario, Canada. The company stated progress related to the transition of Barstool Sportsbook (in the U.S.) to theScore player account management and trading platform. The company anticipates the initiative to pave the path for meaningful cost and revenue synergy opportunities. It expects to complete the process by third-quarter 2023.
The company emphasizes on new game additions, creative marketing and leveraging the casino database to boost the Barstool-branded iCasino business. During the second quarter of 2022, the company launched 97 new third-party slot and table game offerings across its iCasino platform. Also, it emphasized on its pipeline of future customized and third-party iCasino content for both Barstool and theScore Bet. 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 12 properties by 2022 end. However, it is subject to regulatory approvals.
Concerns
Image Source: Zacks Investment Research
Shares of Penn National have declined 61.6% in the past year compared with the industry’s 49.7% fall. The dismal performance was caused by the coronavirus crisis. Although the company resumed operations in all of its properties, traffic is still below pre-pandemic levels. Given the uncertainty around the crisis, chances of operational restrictions (imposed by governmental authorities), reimposing stay-at-home orders and travel restrictions cannot be ruled out. This and a rise in gas prices and other inflationary pressures are a concern.
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 better-ranked stocks in the Zacks Consumer Discretionary sector are Marriott Vacations Worldwide Corporation (VAC - Free Report) , Marriott International, Inc. (MAR - Free Report) and Choice Hotels International, Inc. (CHH - Free Report) .
Marriott Vacations sports a Zacks Rank #1. VAC has a trailing four-quarter earnings surprise of 13.9%, on average. The stock has declined 7% in the past year.
The Zacks Consensus Estimate for VAC’s current financial year sales and EPS indicates an increase of 19.7% and 131.4%, respectively, from the year-ago period’s reported levels.
Marriott carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has increased 16% in the past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.7% and 102.8%, respectively, from the year-ago period’s reported levels.
Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 4.8% in the past year.
The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 21.9% and 19.6%, respectively, from the year-ago period’s reported levels.