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Here's Why You Should Retain PENN Entertainment (PENN) Stock
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PENN Entertainment, Inc. (PENN - Free Report) is likely to benefit from Barstool Sports expansion, 3C’s initiatives and development initiatives. Also, the emphasis on new game additions bodes well. However, a rise in labor and non-gaming costs is a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
PENN Entertainment continues to focus on the Barstool Sports expansion across the United States. During the fourth quarter of 2022, the company completed the initial integration of the Barstool Sportsbook (in the United States) into theScore player account management and trading platform. During the quarter, the initiative paved a path for improved metrics, including an approximately 85% increase in 3-month retention, up almost 20% in cross-sell rates (to iCasino) and a 114 basis point increase in hold rates.
The company remains optimistic in this regard and anticipates the initiative to pave the path for benefits, including cost synergies and improved marketing and promotional capabilities. The company is optimistic about the inclusion of the remaining Barstool Sports in the Penn Entertainment family. PENN is of the opinion that the combination of Barstool’s audience with theScore’s fully integrated media and betting platform will pave the path for new customer acquisition and organic cross-selling opportunities.
Tthe 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 2022, the company reported strong performance in Ontario, with iCasino GGR and Penn Game Studios, handle experiencing significant year-over-year growth. The upside was backed by new game introductions and proprietary content from Penn Game Studios. The company stated plans to launch theScore Bet branded Blackjack games in the first quarter of 2023.
PENN Entertainment continues to evolve toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution removes friction from transactions and reduces wait times and bolsters its marketing capabilities. During the fourth-quarter 2022 conference call, the company announced that 3Cs technology is active in 21 properties. Owing to the continuous roll-out, the company witnessed a rise in mywallet customers (136,000) and deposits (worth $80 million), thereby reflecting growth on a sequential basis.
The company emphasizes on reimaging its properties with best-in-class retail sports books, new games, enhanced technology, refreshed hotel offerings and new third-party restaurant concepts to drive growth. During the fourth quarter of 2022, the company emphasized on relocating its riverboat casino licenses in Aurora and Joliet, Illinois, to new land-based facilities in better locations. Also, it stated plans to build a new hotel at Hollywood Columbus in Ohio and a second hotel tower at the M Resort in Henderson, Nevada. Estimated at a budget of approximately $850 million, the company remains optimistic in this regard. It anticipates the projects to generate strong free cash flow returns and create long-term value for its shareholders.
Concerns
Image Source: Zacks Investment Research
In the past six months, shares of PENN Entertainment have declined 15.4% against the industry’s 16.9% growth. The company’s performance was impacted by headwinds in the digital media and advertising space. Also, the rise in labor and non-gaming costs added to the downside. Although the company started operations at all of its properties, it remains cautious of logistical challenges resulting from COVID-19-related labor shortages and supply chain disruptions.
Wynn Resorts sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 0.6%, on average. The stock has increased 36.3% in the past year.
The Zacks Consensus Estimate for WYNN’s 2023 sales and EPS indicates a rise of 42% and 119.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 16.9% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 47.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain PENN Entertainment (PENN) Stock
PENN Entertainment, Inc. (PENN - Free Report) is likely to benefit from Barstool Sports expansion, 3C’s initiatives and development initiatives. Also, the emphasis on new game additions bodes well. However, a rise in labor and non-gaming costs is a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
PENN Entertainment continues to focus on the Barstool Sports expansion across the United States. During the fourth quarter of 2022, the company completed the initial integration of the Barstool Sportsbook (in the United States) into theScore player account management and trading platform. During the quarter, the initiative paved a path for improved metrics, including an approximately 85% increase in 3-month retention, up almost 20% in cross-sell rates (to iCasino) and a 114 basis point increase in hold rates.
The company remains optimistic in this regard and anticipates the initiative to pave the path for benefits, including cost synergies and improved marketing and promotional capabilities. The company is optimistic about the inclusion of the remaining Barstool Sports in the Penn Entertainment family. PENN is of the opinion that the combination of Barstool’s audience with theScore’s fully integrated media and betting platform will pave the path for new customer acquisition and organic cross-selling opportunities.
Tthe 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 2022, the company reported strong performance in Ontario, with iCasino GGR and Penn Game Studios, handle experiencing significant year-over-year growth. The upside was backed by new game introductions and proprietary content from Penn Game Studios. The company stated plans to launch theScore Bet branded Blackjack games in the first quarter of 2023.
PENN Entertainment continues to evolve toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution removes friction from transactions and reduces wait times and bolsters its marketing capabilities. During the fourth-quarter 2022 conference call, the company announced that 3Cs technology is active in 21 properties. Owing to the continuous roll-out, the company witnessed a rise in mywallet customers (136,000) and deposits (worth $80 million), thereby reflecting growth on a sequential basis.
The company emphasizes on reimaging its properties with best-in-class retail sports books, new games, enhanced technology, refreshed hotel offerings and new third-party restaurant concepts to drive growth. During the fourth quarter of 2022, the company emphasized on relocating its riverboat casino licenses in Aurora and Joliet, Illinois, to new land-based facilities in better locations. Also, it stated plans to build a new hotel at Hollywood Columbus in Ohio and a second hotel tower at the M Resort in Henderson, Nevada. Estimated at a budget of approximately $850 million, the company remains optimistic in this regard. It anticipates the projects to generate strong free cash flow returns and create long-term value for its shareholders.
Concerns
Image Source: Zacks Investment Research
In the past six months, shares of PENN Entertainment have declined 15.4% against the industry’s 16.9% growth. The company’s performance was impacted by headwinds in the digital media and advertising space. Also, the rise in labor and non-gaming costs added to the downside. Although the company started operations at all of its properties, it remains cautious of logistical challenges resulting from COVID-19-related labor shortages and supply chain disruptions.
Zacks Rank & Key Picks
PENN Entertainment 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 Wynn Resorts, Limited (WYNN - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) and Crocs, Inc. (CROX - Free Report) .
Wynn Resorts sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 0.6%, on average. The stock has increased 36.3% in the past year.
The Zacks Consensus Estimate for WYNN’s 2023 sales and EPS indicates a rise of 42% and 119.5%, respectively, from the year-ago period’s estimated levels.
Hilton Grand Vacations currently sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 12.1%, on average. Shares of HGV have declined 16.9% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and EPS indicates a rise of 7.1% and 10.8%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.8%, on average. Shares of Crocs have increased 47.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 12.5% and 2.5%, respectively, from the year-ago period’s levels.