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PENN Entertainment Inc PENN

Morningstar Rating
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Stock XNAS Rating as of
$17.84 +0.41 (2.35%)
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As of Delayed Price Post-Trading: $17.82 −0.01
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Company Report

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DraftKings, Penn, MGM, Caesars: Sports Betting Share Dynamics Clearer Amid Recent Competition

Dan Wasiolek

Pennsylvania and Michigan released sports wagering and revenue data through February, including individual operator performance. The data supports our view that no-moat Penn is grabbing share at the hands of no-moat peers MGM and Caesars, while no-moat DraftKings adds to its leading position due to first mover and technology advantages. In fact, since launching ESPNBet in November, Penn has averaged a 4- and 7-percentage-point sports revenue share improvement over the prior year in Pennsylvania and Michigan, respectively, reaching a high-single-digit share of both markets and aligning with our forecast. Meanwhile, MGM’s share over the same time is lower by 3 and 5 percentage points; Caesars’ is flat and down 3 percentage points; and smaller competitors are collectively lower by 3 and 3 percentage points. Conversely, DraftKings’ share is up 7 and 11 percentage points.

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Price vs Fair Value

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PENN is trading at a 27% discount.
Price
$17.43
Fair Value
$92.00
Uncertainty
Very High
1-Star Price
$81.00
5-Star Price
$64.00
Economic Moat
Rtzy
Capital Allocation
Rtswrpk

Bulls Say, Bears Say

Bulls

We see Penn's domestic properties and partnership with ESPN as well positioned to benefit from the more than $40 billion U.S. sports betting and iGaming revenue opportunity by 2030.

Bears

Debt levels are elevated, which could inflate financing costs for future renovations and investment.

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News

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Trading Information

Previous Close Price
$17.43
Day Range
$17.18–17.86
52-Week Range
$15.88–31.63
Bid/Ask
$17.60 / $17.84
Market Cap
$2.72 Bil
Volume/Avg
8.8 Mil / 5.8 Mil

Key Statistics

Price/Earnings (Normalized)
14.64
Price/Sales
0.42
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
5.64%

Company Profile

Penn Entertainment’s origins date back to its 1972 racetrack opening in Pennsylvania. Today, Penn operates 43 properties across 20 states and 12 brands (such as Hollywood Casino and Ameristar), with land-based casinos representing 89% of total sales in 2023 (11% was from the interactive segment, which includes sports, iGaming, and media revenue). The retail portfolio generates mid-30% EBITDAR margins and helps position the company to obtain licenses for the digital wagering markets. Additionally, Penn’s media assets, theScore and ESPN (starting with its partnership launch Nov. 14, 2023), provide access to sports betting/iGaming technology and clientele, helping it form a leading digital position.
Sector
Consumer Cyclical
Industry
Resorts & Casinos
Stock Style Box
Small Value
Total Number of Employees
23,333
Website
https://www.pennentertainment.com

Competitors

Valuation

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Metric
PENN
CZR
DKNG
Price/Earnings (Normalized)
 14.6493.00—
Price/Book Value
 0.831.8022.80
Price/Sales
 0.420.715.12
Price/Cash Flow
 3.134.39—
Price/Earnings
PENN
CZR
DKNG

Financial Strength

Metric
PENN
CZR
DKNG
Quick Ratio
 0.930.601.05
Current Ratio
 1.110.761.34
Interest Coverage
 −0.160.97−316.16
Quick Ratio
PENN
CZR
DKNG

Profitability

Metric
PENN
CZR
DKNG
Return on Assets (Normalized)
 −1.80%3.43%−11.51%
Return on Equity (Normalized)
 −8.09%27.28%−44.18%
Return on Invested Capital (Normalized)
 0.57%13.64%−20.84%
Return on Assets
PENN
CZR
DKNG
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Resorts & Casinos Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
LVS
Las Vegas Sands CorpNskjpqldpJnqsvr$34.3 Bil
GXYYY
Galaxy Entertainment Group Ltd ADR—Zfmrgz$19.5 Bil
GXYEF
Galaxy Entertainment Group Ltd—Dbsyxzm$19.5 Bil
SCHYF
Sands China Ltd Shs Unitary 144A/Reg S—Qbjpky$19.1 Bil
SCHYY
Sands China Ltd ADR—Sfvzmb$19.1 Bil
MGM
MGM Resorts InternationalHjywmdjsmSyl$13.6 Bil
WYNN
Wynn Resorts LtdWvldhmxwsJcqyqvb$10.9 Bil
CZR
Caesars Entertainment IncMrhdykrgwzWtq$8.5 Bil
MLCO
Melco Resorts and Entertainment Ltd ADRXjtlcjcwgRpnlvlt$2.7 Bil

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