Penn National Gaming, Inc.: Bull/Bear Discussion
Penn National Gaming, Inc.
Consumer, TMT
08/28/2020
Presented
| Date | 08/26/2020 |
| Price | $55.18 |
| Market Cap | $7.59B |
| Ent Value | $14.63B |
| P/E Ratio | N/A |
| Book Value | $10.79 |
| Div Yield | 0% |
| Shares O/S | 137.63M |
| Ave Daily Vol | 11,399,272 |
| Short Int | 12.95% |
Current
| Price | $18.51 |
| Market Cap | $2.82B |
| Penn National Gaming, Inc. owns and manages gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. It operates through the following business segments: Northeast, South, West and Midwest.. The Northeast segment consists of the following properties: Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course, Hollywood Casino Toledo, Hollywood Casino Columbus, Hollywood Gaming at Dayton Raceway, Hollywood Gaming at Mahoning Valley Race Course, and Plain ridge Park Casino. The South and West segment comprises of the following properties: Zia Park Casino, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, M Resort, Tropicana Las Vegas, 1st Jackpot and Resorts. The Midwest segment controls the following properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Lawrenceburg, Hollywood Casino St. Louis, and Prairie State Gaming. The company was founded in 1982 and is headquartered in Wyomissing, PA. |
Publicly traded companies mentioned herein: DraftKings Inc (DKNG), Flutter Entertainment PLC (FLTR LN), Penn National Gaming Inc (PENN), William Hill PLC (WMH LN)
Highlights
On August 26, 2020, DeMatteo Research hosted a bull/bear discussion on Penn National Gaming Inc (PENN) and the online sports betting industry. The group shared a wide range of opinions regarding prospects for PENN’s core regional casino business, online sports betting industry growth, and customer acquisition and market share dynamics (e.g., the impact of Barstool’s user base, use of promotions and the impact on profitability, etc.). PENN trades at ~$55 per share, and the bulls feel that current valuation is justified. They generally feel that the core gaming business will recover and generate strong levels of FCF; one bull values this segment at $30 – $35 per share, while another values it at $35 – $40. These bullish participants also see upside potential on the back of a unique customer acquisition opportunity (given PENN’s Barstool Sports ownership) and secular growth from states that are already open and states that will eventually legalize online sports betting.
On the other end of the spectrum, the bearish participants feel that there is downside risk to the profitability of the regional casino business. They also note that PENN’s online sportsbook rollout and industry expansion will be slower and more expensive than expected. The most bearish participant expressed skepticism about PENN’s ability to capture the Barstool Sports user base.
Core Gaming Business
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