PENN - Embedded Expectations Analysis - 2021 09 07
Penn National Gaming, Inc. (PENN:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.9x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain stable, though given management's confidence about market share guidance, vertical integration, and the regulated gaming industry, market expectations are overly bearish. As such, equity outperformance is likely.Specifically, management is confident their market share guidance is well projected, their 4.7 iOS app rating puts them at the top of the marketplace, and that they would consider deals with companies to increase vertical integration. In addition, they are confident media companies rarely venture in the regulated gaming industry and that their customers have strong LTV due to their age.
Given management's confidence about market share guidance, vertical integration, and their positioning within the growing regulated gaming industry, market expectations are overly bearish. As such, equity outperformance is likely for PENN.
Penn National Gaming is an owner and manager of gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. In addition, the company operates an interactive gaming division through its subsidiary, Penn Interactive Ventures, LLC. The company's segment's properties include Ameristar East Chicago, Hollywood Casino Bangor, 1st Jackpot Casino, Ameristar Vicksburg, Boomtown Biloxi, Boomtown Bossier City, Ameristar Black Hawk, Cactus Petes and Horseshu, Ameristar Council Bluffs, Argosy Casino Alton, Argosy Casino Riverside, Freehold Raceway, Retama Park Racetrack, Sam Houston Race Park and Valley Race Park, and Sanford-Orlando Kennel Club, among others.
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