Penn National Gaming, Inc. (PENN) May Not Seem Overly Alluring At First Blush

Penn National Gaming, Inc. (NASDAQ:PENN) is now being followed by SunTrust, as they initiated the stock at Buy on October 02. Analysts at JP Morgan, started covering the stock on June 08 with a Overweight rating. Brokerage firm Telsey Advisory Group, looks cautious as they stick to prior recommendation of Outperform, in a call on April 27. However, they did change the target price from $33 to $40. SunTrust analysts came out with bullish views on April 26 when the call was made. They think the stock is now Buy compared to to their prior call for Hold.

Penn National Gaming, Inc. (PENN) hit an intraday high Thursday at $22.92. The shares finished at $22.89, after trading as low as $21.51 earlier in the session. It rose 3.39% in recent trade and currently has a stock-market value of $2.75B. Trading activity significantly improved as the volume at ready counter increased to 3,333,812 shares versus 2,267,355 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 1,649,267 shares. The stock is now 22.01% above against its bear-market low of $18.76 on November 12, 2018. It has retreated -61.21% since it’s 52-week high of $36.9 reached in July. Now the market price is down -19.94% on the year and down -26.94% YTD.

PENN’s 50 day simple moving average (SMA 50) price is $25.35 and its 200-day simple moving average (SMA 200) price is $29.77. The company’s stock currently has a total float of 111.67M shares. Its weekly volatility is hovering around 3.94% and felt 4.83% volatility in price over a month. On the upside, the share price will test short term resistance at around $23.37. On a downside, the stock is likely to find some support, which begins at $21.96. The failure to get near-term support could push it to $21.03.

Separately, it has been reported that multiple insider activity took place at Penn National Gaming, Inc. (PENN). Director Naples Ronald J acquired 500 shares for $2,000 in transaction occurred on 2018/12/04. After making this transaction, the Director owns a direct stake of 11,065 shares, worth $45,780, as per the last closing price. On 2018/11/30 Naples Ronald J, Director at PENN, purchased 500 shares at an average price of $22.21 per share. The new stake is valued at $34,335.

Director, Scaccetti Jane had invested in 1,000 shares for $14,925 through a trade on 2018/11/16. Following this activity, the insider holds 21,380 shares worth $341,633 as of recent close. Wall Street’s most bullish Penn National Gaming, Inc. (NASDAQ:PENN) analysts are predicting the share price to blow past $38 per share during the next 12 months. The current median share price forecast by them is $32, suggesting that the stock could increase 39.8% in that time frame. The average price target of $32.92 calls for a nearly 43.82% increase in the stock price.

When looking at valuations, Penn National Gaming, Inc. (PENN) has a cheap P/E of 42.79x as compared to industry average of 44.95x. Moreover, it trades for 13.97 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 29.73x price/book and 0.86x price/sales. Compared to others, Penn National Gaming, Inc. is in a different league with regards to profitability, having net margins of -6.3%. To put some perspective around this, the industry’s average net margin is 12.38%. It’s also not liquid in the near term, with a current ratio of 0.7. The stock has a debt/capital of 64.45.

Shares of Penn National Gaming, Inc. (PENN) have dropped -8.8% since the company’s last earnings report. Over the past 12 fiscal quarters, Penn National Gaming, Inc. (NASDAQ:PENN) has topped consensus earnings estimates in 8 quarters (66%), missed earnings in 4 quarters (33%), whereas at 0 occasion EPS met analyst expectations. PENN last reported earnings on November 01, 2018 when it released Sep-18 results that receded expectations. The company raked in $0.38 per share, -97.39% change on the same period last year. That was worse than consensus for $0.44. Revenue for the recent quarter stood at $789.65 million, down -2% on last year and below the $807.7 million predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $1.15 billion to $1.17 billion, which should be compared with $775.53 million generated last year. EPS is seen in a range of -$0.43 to -$0.03, against the $0.22 reported a year ago.