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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 strategic partnerships, 3C’s initiatives and a loyalty program. However, a rise in labor costs and an uncertain macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Strategic Partnerships: PENN Entertainment collaborates with various gaming companies to leverage its unique brands, large audience and commitment to serving sports fans.
In August 2023, the company entered into a transformative, exclusive, long-term strategic alliance with ESPN relating to online sports betting within the United States. Per the agreement, PENN will rebrand its existing Barstool Sportsbook across all online platforms in the United States as ESPN Bet (the “Sportsbook”) and oversee daily Sportsbook operations. The comprehensive alliance also paves a path for exclusive promotional services across all of ESPN’s platforms, programming and content, including access to ESPN’s popular roster of sports media personalities.
The company is optimistic about including ESPN in the Penn Entertainment family. By utilizing the top sports media outlets in the United States (ESPN) and Canada (theScore), PENN can effectively develop its client base and considerably expand its digital reach.
3C’s: PENN Entertainment continues progressing toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution removes transaction friction, reduces wait times and bolsters its marketing capabilities.
Loyalty Program: Increased focus on the loyalty program bodes well. During the first quarter of 2023, the company announced the launch of an enhanced and rebranded customer loyalty program, PENN Play. The program connects the Company’s brands under one loyalty program. It offers members various incentives, including priority access, discounts, gifts, trips to PENN destinations, partner experiences and PENN Cash.
Given the rising adoption of digital wallets and its supporting role in increasing visitation and time on device, the company anticipates the program to drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
So far this year, shares of PENN Entertainment have declined 19.1% against the industry’s 23% growth. The company’s performance was impacted by a rise in labor and non-gaming costs. During the second quarter of 2023, the company’s Food, beverage, hotel and other expenses came in at $267.8 million compared with $186.8 million reported in the prior-year quarter. General and administrative expenses during the quarter came in at $380.3 million compared with $273.8 million reported in the prior year period. The company is cautious about the ongoing uncertain macroeconomic environment.
For 2023, our model predicts Food, beverage, hotel and other expenses to rise 32.3% year-over-year to $1,014.7 million. General and administrative expenses for 2023 are estimated to increase 31.1% yearly to $1,455.6 million.
Zacks Rank & Key Picks
PENN Entertainment currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 54.5% and 180.3%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 147.9% on average. Shares of TCOM have increased 62.1% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 39.1% on average. Shares of SKX have increased 39.2% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 8.7% and 42%, 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 strategic partnerships, 3C’s initiatives and a loyalty program. However, a rise in labor costs and an uncertain macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Strategic Partnerships: PENN Entertainment collaborates with various gaming companies to leverage its unique brands, large audience and commitment to serving sports fans.
In August 2023, the company entered into a transformative, exclusive, long-term strategic alliance with ESPN relating to online sports betting within the United States. Per the agreement, PENN will rebrand its existing Barstool Sportsbook across all online platforms in the United States as ESPN Bet (the “Sportsbook”) and oversee daily Sportsbook operations. The comprehensive alliance also paves a path for exclusive promotional services across all of ESPN’s platforms, programming and content, including access to ESPN’s popular roster of sports media personalities.
The company is optimistic about including ESPN in the Penn Entertainment family. By utilizing the top sports media outlets in the United States (ESPN) and Canada (theScore), PENN can effectively develop its client base and considerably expand its digital reach.
3C’s: PENN Entertainment continues progressing toward the new generation of cordless, cashless and contactless technology, collectively known as 3C’s, to drive growth. The technological solution removes transaction friction, reduces wait times and bolsters its marketing capabilities.
Loyalty Program: Increased focus on the loyalty program bodes well. During the first quarter of 2023, the company announced the launch of an enhanced and rebranded customer loyalty program, PENN Play. The program connects the Company’s brands under one loyalty program. It offers members various incentives, including priority access, discounts, gifts, trips to PENN destinations, partner experiences and PENN Cash.
Given the rising adoption of digital wallets and its supporting role in increasing visitation and time on device, the company anticipates the program to drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
So far this year, shares of PENN Entertainment have declined 19.1% against the industry’s 23% growth. The company’s performance was impacted by a rise in labor and non-gaming costs. During the second quarter of 2023, the company’s Food, beverage, hotel and other expenses came in at $267.8 million compared with $186.8 million reported in the prior-year quarter. General and administrative expenses during the quarter came in at $380.3 million compared with $273.8 million reported in the prior year period. The company is cautious about the ongoing uncertain macroeconomic environment.
For 2023, our model predicts Food, beverage, hotel and other expenses to rise 32.3% year-over-year to $1,014.7 million. General and administrative expenses for 2023 are estimated to increase 31.1% yearly to $1,455.6 million.
Zacks Rank & Key Picks
PENN Entertainment currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 28.5% on average. Shares of RCL have gained 133.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 54.5% and 180.3%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 147.9% on average. Shares of TCOM have increased 62.1% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 39.1% on average. Shares of SKX have increased 39.2% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 8.7% and 42%, respectively, from the year-ago period’s levels.