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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, development plans and 3C’s initiatives. Also, the focus on the loyalty program bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock now.
Growth Catalysts
Strategic Partnerships: PENN Entertainment partners with multiple gaming companies, leveraging its distinctive brands, vast audience and dedication to serving sports enthusiasts. The company unveiled a strategic alliance with Quail Hollow Club and Wells Fargo Championship, paving the way for ESPN BET's entry into North Carolina's online sports betting realm. Pending regulatory approval, this collaboration grants PENN's ESPN BET platform access to the state's market, aligning with the platform's nationwide expansion strategy and marking a pivotal move in claiming a significant stake in this emerging market.
As part of the agreement, ESPN BET secures an exclusive position as the official betting operator for the esteemed Wells Fargo Championship, a prestigious PGA TOUR Signature Event held at Charlotte's Quail Hollow Club. This partnership not only establishes ESPN BET as a major player in golf betting but also unlocks numerous marketing avenues. The sportsbook gains rights to engage golf enthusiasts directly during the tournament, leveraging the influential brands of ESPN and PENN Entertainment.
ESPN BET was launched in 17 states on Nov 14 and represents a fusion of ESPN's renowned brand and PENN's advanced technology. This strategic partnership reinforces PENN's standing in the dynamic sports betting landscape, offering an appealing investment prospect for those interested in the convergence of entertainment and online betting. With pending regulatory approvals, PENN is positioned to capitalize on North Carolina's flourishing market, further expanding its presence in the online sports betting arena.
Development Plans: The company emphasizes 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. Work on four retail expansion projects is set to begin soon. The Hollywood Aurora and Hollywood Joliet projects present an opportunity to enhance aging Riverboat properties that have seen declining revenues amid ongoing competition. This transition allows the company to avoid significant investments in the current riverboats' upkeep. Instead, it will develop upgraded facilities with better amenities, capitalizing on higher traffic from direct access to major interstates. The company is optimistic in this regard and anticipates the projects will generate strong free cash flow returns and create long-term value for shareholders.
3Cs: PENN Entertainment continues progressing toward the new generation of cordless, cashless and contactless technology, collectively known as 3Cs, 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 their supporting role in increasing visitation and time on devices, the company anticipates the program will drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
In the past year, shares of PENN Entertainment have declined 20.3% against the industry’s 24% growth. A rise in labor and non-gaming costs impacted the company’s performance. During the third quarter of 2023, the company’s Food, beverage, hotel and other expenses came in at $261.4 million compared with $199.2 million reported in the prior-year quarter. General and administrative expenses during the quarter came in at $406.4 million compared with $277.9 million reported in the prior-year period. The company is cautious about the ongoing uncertain macroeconomic environment.
Zacks Rank & Key Picks
PENN Entertainment currently carries a Zacks Rank #3 (Hold).
RCL has a trailing four-quarter earnings surprise of 28.3%, on average. Shares of RCL have surged 145.4% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates a rise of 13.7% and 38.1%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 37.5%, on average. Shares of LYV have increased 29.2% in the past year.
The Zacks Consensus Estimate for LYV’s 2024 sales and EPS indicates a rise of 8.2% and 61.1%, respectively, from the year-ago period’s levels.
JAKKS Pacific, Inc. (JAKK - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 61.8%, on average. Shares of JAKK have increased 116.2% in the past year.
The Zacks Consensus Estimate for JAKK’s 2024 sales indicates a rise of 3.6% 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, development plans and 3C’s initiatives. Also, the focus on the loyalty program bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock now.
Growth Catalysts
Strategic Partnerships: PENN Entertainment partners with multiple gaming companies, leveraging its distinctive brands, vast audience and dedication to serving sports enthusiasts. The company unveiled a strategic alliance with Quail Hollow Club and Wells Fargo Championship, paving the way for ESPN BET's entry into North Carolina's online sports betting realm. Pending regulatory approval, this collaboration grants PENN's ESPN BET platform access to the state's market, aligning with the platform's nationwide expansion strategy and marking a pivotal move in claiming a significant stake in this emerging market.
As part of the agreement, ESPN BET secures an exclusive position as the official betting operator for the esteemed Wells Fargo Championship, a prestigious PGA TOUR Signature Event held at Charlotte's Quail Hollow Club. This partnership not only establishes ESPN BET as a major player in golf betting but also unlocks numerous marketing avenues. The sportsbook gains rights to engage golf enthusiasts directly during the tournament, leveraging the influential brands of ESPN and PENN Entertainment.
ESPN BET was launched in 17 states on Nov 14 and represents a fusion of ESPN's renowned brand and PENN's advanced technology. This strategic partnership reinforces PENN's standing in the dynamic sports betting landscape, offering an appealing investment prospect for those interested in the convergence of entertainment and online betting. With pending regulatory approvals, PENN is positioned to capitalize on North Carolina's flourishing market, further expanding its presence in the online sports betting arena.
Development Plans: The company emphasizes 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. Work on four retail expansion projects is set to begin soon. The Hollywood Aurora and Hollywood Joliet projects present an opportunity to enhance aging Riverboat properties that have seen declining revenues amid ongoing competition. This transition allows the company to avoid significant investments in the current riverboats' upkeep. Instead, it will develop upgraded facilities with better amenities, capitalizing on higher traffic from direct access to major interstates. The company is optimistic in this regard and anticipates the projects will generate strong free cash flow returns and create long-term value for shareholders.
3Cs: PENN Entertainment continues progressing toward the new generation of cordless, cashless and contactless technology, collectively known as 3Cs, 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 their supporting role in increasing visitation and time on devices, the company anticipates the program will drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
In the past year, shares of PENN Entertainment have declined 20.3% against the industry’s 24% growth. A rise in labor and non-gaming costs impacted the company’s performance. During the third quarter of 2023, the company’s Food, beverage, hotel and other expenses came in at $261.4 million compared with $199.2 million reported in the prior-year quarter. General and administrative expenses during the quarter came in at $406.4 million compared with $277.9 million reported in the prior-year period. The company is cautious about the ongoing uncertain macroeconomic environment.
Zacks Rank & Key Picks
PENN Entertainment currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector include:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
RCL has a trailing four-quarter earnings surprise of 28.3%, on average. Shares of RCL have surged 145.4% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates a rise of 13.7% and 38.1%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 37.5%, on average. Shares of LYV have increased 29.2% in the past year.
The Zacks Consensus Estimate for LYV’s 2024 sales and EPS indicates a rise of 8.2% and 61.1%, respectively, from the year-ago period’s levels.
JAKKS Pacific, Inc. (JAKK - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 61.8%, on average. Shares of JAKK have increased 116.2% in the past year.
The Zacks Consensus Estimate for JAKK’s 2024 sales indicates a rise of 3.6% from the year-ago period’s levels.