Penn National Gaming (PENN) has made an enormous push into on-line playing as extra states enable sports activities betting and on-line wagering. Is Penn inventory a purchase proper now? Here is what the basics and technical evaluation say.
Penn is the nation’s largest and most diversified regional gaming firm. It has 43 properties throughout 20 states. Penn operates beneath manufacturers that embrace Hollywood, Ameristar and L’Auberge. Penn Interactive operates retail sports activities betting throughout the corporate’s portfolio, in addition to on-line social on line casino, bingo and that iCasino merchandise.
To bolster its sports activities betting portfolio, Penn has partnered with Barstool Sports to launch its on-line sports activities betting app in a number of states during the last yr. On May 18, Penn launched Barstool in Indiana. Indiana is now the corporate’s fourth on-line sports activities betting market, following launches in Pennsylvania, Michigan and Illinois.
On Oct. 19, Penn accomplished its buy of Score Media and Gaming for $2 billion. Canada-based Score launched theScore Bet app for cellular wagers in 2019. Penn mentioned the deal will give it entry to in-house know-how and permit it to broaden its product choices.
On May 27, Penn obtained closing approval from the Maryland Lottery and Gaming Control Commission to amass the operations of Hollywood Casino Perryville. The firm struck a cope with Gaming and Leisure Properties late final yr to amass the operations of Hollywood Casino Perryville for $31.1 million. The deal expands Penn’s nationwide footprint to twenty gaming jurisdictions.
On Aug. 12, Penn introduced opened Hollywood Casino York in Pennsylvania. Located within the York Galleria Mall in Springettsbury Township, the on line casino represents Penn’s third facility within the state. A fourth property, Hollywood Casino Morgantown, is scheduled to open later this yr.
Penn Earnings And Fundamental Analysis
Penn posted earnings of 52 cents a share, a 44% decline from the year-ago interval, on gross sales of $1.51 billion. Wall Street consensus was for EPS declining 20% to 64 cents and gross sales to realize 34% to $1.51 billion. Penn inventory tumbled on the earnings miss.
CEO Jay Snowden mentioned Penn launched the Barstool Sportsbook cellular app in Colorado, New Jersey, Tennessee, Virginia, Arizona and Iowa, which greater than doubled its footprint to 10 states.
Snowden added mentioned that whereas July was a document month, the second half of August and September was impacted by Hurricane Ida and regional flare-ups of the delta variant, decreasing margins by an round $30 million and 85 foundation factors.
“As the working atmosphere has normalized, we’ve seen improved leads to October,” he mentioned in a press release.
Penn additionally spent $12.5 million lobbying to help the California sports activities betting initiative and $7.5 million to launch Barstool in new states.
The EPS score displays an organization’s well being on basic earnings metrics, and its SMR Rating gauges gross sales development, revenue margins and return on fairness.
Penn Stock Technical Analysis
Penn inventory dropped virtually 10% after reporting Q3 earnings beneath estimates. Shares are buying and selling round $66, effectively beneath their intraday excessive of 142 on March 15, when information broke that Penn could be added to the S&P 500 on March 22. Rival Caesars was added on the similar time.
Shares closed beneath their 10-week line on March 26, reclaiming that key stage in the previous couple of weeks, solely to dip beneath it once more, MarketSmith chart analysis reveals. Penn shares are additionally buying and selling beneath its long-sliding 50-day line.
The relative strength line is slumping, close to all-time lows. Penn inventory has a Relative Strength Rating of 25 out of a attainable 99.
With a Composite Rating of 39 out of 99, Penn is ranked No. 20 within the leisure gaming/gear business group. The score combines key basic and technical metrics in a single, easy-to-use rating.
Penn inventory is a element of the Roundhill Sports Betting & Gaming ETF (BETZ), which holds dozens of playing shares. BETZ’s prime holdings embrace Penn, in addition to rivals Flutter Entertainment (which owns FanDuel), DraftKings and William Hill PLC.
Penn Game Studios Launch
On May 3, Penn introduced it had created Penn Game Studios, an in-house content material improvement crew centered on creating unique iCasino content material. To gas this effort, Penn is buying HitPoint Studios and its spun-off actual cash gaming firm, FortunatePoint. Terms of the deal weren’t disclosed.
“We will now have the flexibility to create unique content material for our audiences, additional leverage the Barstool Sports model and our database of 20 million myChoice clients, and create cross-marketing alternatives with our brick-and-mortar amenities,” Snowden mentioned in a press release.
HitPoint is an impartial sport design and improvement studio based in 2008. It develops platforms for real-time multiplayer informal cellular video games and runs the day-to-day dwell operations for a number of video games utilizing their proprietary know-how stack.
In 2019, HitPoint spun out FortunatePoint to give attention to real-money sport improvement and the creation and operation of a distant gaming server. In addition to conventional on-line on line casino desk video games and slot machines, the FortunatePoint RGS brings a wide range of gaming kinds to desktop and cellular units, together with retro-style arcade video games and puzzle video games.
Online Gambling Lifts Penn Stock
After the Supreme Court dominated in 2018 to overturn a federal ban on sports activities betting, 25 states have passed laws allowing it, together with on-line playing.
The online gambling market is slated to achieve $127.3 billion by 2027, in accordance with Grand View Research.
In September, Penn launched Barstool in Pennsylvania, the No. 3 betting market within the U.S., behind New Jersey and Nevada. Barstool expanded in Michigan in January.
On March 11, Penn launched its Barstool app in Illinois, in time for the school basketball match March Madness, which ran from March 18 to April 5. The match introduced in $1.5 billion in betting income, in accordance with PlayUSA.com. In February, the Super Bowl took in practically $500 million.
Illinois can be house to considered one of Barstool’s prime markets, Chicago.
“The preliminary outcomes for the primary 30 days of operations exceeded our expectations, with higher first-time deposit conversions relative to what we had generated in Pennsylvania or Michigan,” Snowden mentioned in a press release.
During this era, Barstool registered over 54,700 new clients and generated whole deal with and gaming income of $67.7 million and $6.5 million, respectively.
Barstool now has greater than 400,000 clients and generated over $660 million and $61 million in deal with and gaming income, respectively. The firm plans to roll out Barstool in eight states by soccer season and in at the very least 10 states earlier than the top of the yr.
Recently, Penn’s Barstool has seen its market share shrink. Barstool’s share fell to 7% in September from 12% in August, in accordance with a Morgan Stanley report on Oct. 5. Meanwhile, rival BetMGM had about 12% market share in September vs. 11% in August. DraftKings had the most important share with 32%, adopted by FanDuel at 27%. Both DraftKings and FanDuel additionally elevated their share from final month by 2% and seven%, respectively.
New York Passes Gambling Law
On April 7, New York state handed a funds with a invoice to legalize on-line sports activities betting. The legislation authorizes New York’s State Gaming Commission to decide on two platform suppliers to turn out to be cellular sports activities wagering operators primarily based on a aggressive bidding course of.
The fee could enable greater than two cellular sports activities wagering operators if it finds that doing so is in the perfect pursuits of the state. Licensees should pay a one-time $25 million charge to the state. And the operator’s license will should be renewed after 10 years.
New York is likely one of the Big Four states that may actually transfer the needle for playing shares like Penn. The different three are Michigan, which already permits on-line sports activities wagering, Florida and California.
Legal on-line sports activities betting launched in Canada on Aug. 27. That opens a door to growth north of the border for Penn, DraftKings and others.
Is Penn Stock A Buy Now?
While the marketplace for on-line playing is rising and could be a promising income stream for Penn, analysts warning there might be bumps within the highway. Two of the so-called Big Four states nonetheless don’t enable sports activities betting. New York and Michigan not too long ago handed legal guidelines permitting sports activities wagering, however California and Florida have not.
Penn inventory has soared to document highs, however has since retreated beneath its 50-day transferring common.
Bottom line: Penn inventory just isn’t a purchase as it’s buying and selling effectively beneath its 50-day line and its 200-day line. Still, as a frontrunner within the booming sports activities betting market, buyers ought to regulate this inventory for future shopping for alternatives. Also observe that whereas the corporate posted three straight quarters of earnings, it recorded a loss within the final quarter.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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