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PENN Entertainment (PENN) Banks on Gaming Demand Amid High Cost
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PENN Entertainment, Inc. (PENN - Free Report) is benefiting from a solid sports betting business, the implementation of the 3Cs initiative and its loyalty program. Also, impressive business growth in the Northeast segment boosts the company’s growth.
Earnings estimates for 2023 have moved north to $3.99 per share from $1.46 per share over the past 60 days. This depicts analysts' optimism over the company’s growth prospects. Solidifying this prospect, the company has a strong VGM Score of A, backed by a Value Score of A and a Growth Score of B.
However, this multi-jurisdictional owner and manager of gaming and racing facilities is facing certain headwinds in the form of increased operational costs and expenses.
Factors Favoring PENN
PENN Entertainment is a leading gaming company in the United States and is known for its consistent business strategies and strong brand recognition. This is helping it in gaining increased demand for its sports betting services. The company focuses on collaborating with various gaming companies for leveraging its unique brands, large audience and commitments to serve sports fans. It is quite optimistic about the endless brand value of Barstool and theScore. During the first quarter of 2023, the company reported solid revenue and engagement results across theScore mobile business and Barstool Sports. Compelling content and an exceptional product experience added to the upside.
PENN Entertainment continues to expand the new generation of cordless, cashless and contactless technology, collectively known as 3Cs. On rthe first-quarter 2023 conference call, the company announced that the 3Cs technology is active in 21 properties. Owing to the continuous rollout, the company witnessed a rise in mywallet customers (195,000) and deposits (worth $104 million), thereby reflecting growth on a sequential basis.
During the first quarter of 2023, PENN announced the launch of an enhanced and rebranded customer loyalty program, PENN Play. The initiative offers players a wide range of incentives across its business verticals, interactive, retail gaming and marketplace. During the quarter, the company reported 350,000 new membership signups, reflecting a rise of 13% year over year. Also, it recorded benefits from partner brands, including Live Nation and Choice Hotels.
Factors Impeding Growth
Shares of PENN have declined 22.5% in the year-to-date period against the Zacks Gaming industry’s growth of 25.5%.
Image Source: Zacks Investment Research
PENN Entertainment’s growth has been restricted by increased operating expenses, including gaming expenses as well as general and administrative expenses. During first-quarter 2023, the company’s gaming expenses were $729.5 million, up from $686.6 million reported in the prior-year quarter. The increase was due to a rise in third-party service provider fees, higher payroll expenses and an increase in gaming taxes. Also, in the quarter, general and administrative expenses increased 33% to $392.9 million year over year. These increasing expenses are affecting the bottom line of the company.
Royal Caribbean Cruises presently sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The stock has surged 98.1% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates a rise of 48.5% and 162.9%, respectively, from the year-ago period’s levels.
Skechers currently sports a Zacks Rank #1. SKX delivered a trailing four-quarter earnings surprise of 18.8%, on average. Shares of the company have increased 21% in the year-to-date period.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.7% and 31.5%, respectively, from the year-ago period’s levels.
Marriott currently carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 8%, on average. Shares of the company have increased 15.1% in the year-to-date period.
The Zacks Consensus Estimate for MAR’s 2023 sales and EPS indicates a rise of 12.9% and 25.4%, respectively, from the year-ago period’s levels.
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PENN Entertainment (PENN) Banks on Gaming Demand Amid High Cost
PENN Entertainment, Inc. (PENN - Free Report) is benefiting from a solid sports betting business, the implementation of the 3Cs initiative and its loyalty program. Also, impressive business growth in the Northeast segment boosts the company’s growth.
Earnings estimates for 2023 have moved north to $3.99 per share from $1.46 per share over the past 60 days. This depicts analysts' optimism over the company’s growth prospects. Solidifying this prospect, the company has a strong VGM Score of A, backed by a Value Score of A and a Growth Score of B.
However, this multi-jurisdictional owner and manager of gaming and racing facilities is facing certain headwinds in the form of increased operational costs and expenses.
Factors Favoring PENN
PENN Entertainment is a leading gaming company in the United States and is known for its consistent business strategies and strong brand recognition. This is helping it in gaining increased demand for its sports betting services. The company focuses on collaborating with various gaming companies for leveraging its unique brands, large audience and commitments to serve sports fans. It is quite optimistic about the endless brand value of Barstool and theScore. During the first quarter of 2023, the company reported solid revenue and engagement results across theScore mobile business and Barstool Sports. Compelling content and an exceptional product experience added to the upside.
PENN Entertainment continues to expand the new generation of cordless, cashless and contactless technology, collectively known as 3Cs. On rthe first-quarter 2023 conference call, the company announced that the 3Cs technology is active in 21 properties. Owing to the continuous rollout, the company witnessed a rise in mywallet customers (195,000) and deposits (worth $104 million), thereby reflecting growth on a sequential basis.
During the first quarter of 2023, PENN announced the launch of an enhanced and rebranded customer loyalty program, PENN Play. The initiative offers players a wide range of incentives across its business verticals, interactive, retail gaming and marketplace. During the quarter, the company reported 350,000 new membership signups, reflecting a rise of 13% year over year. Also, it recorded benefits from partner brands, including Live Nation and Choice Hotels.
Factors Impeding Growth
Shares of PENN have declined 22.5% in the year-to-date period against the Zacks Gaming industry’s growth of 25.5%.
Image Source: Zacks Investment Research
PENN Entertainment’s growth has been restricted by increased operating expenses, including gaming expenses as well as general and administrative expenses. During first-quarter 2023, the company’s gaming expenses were $729.5 million, up from $686.6 million reported in the prior-year quarter. The increase was due to a rise in third-party service provider fees, higher payroll expenses and an increase in gaming taxes. Also, in the quarter, general and administrative expenses increased 33% to $392.9 million year over year. These increasing expenses are affecting the bottom line of the company.
Zacks Rank & Key Picks
PENN currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Consumer Discretionary sector are Royal Caribbean Cruises Ltd. (RCL - Free Report) , Skechers U.S.A., Inc. (SKX - Free Report) and Marriott International, Inc. (MAR - Free Report) .
Royal Caribbean Cruises presently sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The stock has surged 98.1% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates a rise of 48.5% and 162.9%, respectively, from the year-ago period’s levels.
Skechers currently sports a Zacks Rank #1. SKX delivered a trailing four-quarter earnings surprise of 18.8%, on average. Shares of the company have increased 21% in the year-to-date period.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.7% and 31.5%, respectively, from the year-ago period’s levels.
Marriott currently carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 8%, on average. Shares of the company have increased 15.1% in the year-to-date period.
The Zacks Consensus Estimate for MAR’s 2023 sales and EPS indicates a rise of 12.9% and 25.4%, respectively, from the year-ago period’s levels.