PENN Entertainment, Inc. (NASDAQ: PENN)

Sector: Consumer Cyclical Industry: Resorts & Casinos CIK: 0000921738
Market Cap 1.73 Bn
P/B 0.88
P/E -1.91
P/S 0.25
ROIC (Qtr) -5.21
Div Yield % 0.00
Rev 1y % (Qtr) 4.76
Total Debt (Qtr) 11.17 Bn
Debt/Equity (Qtr) 5.70
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About

PENN Entertainment, Inc. (PENN), a prominent player in the gaming and entertainment industry, offers a diverse range of services and products across North America. The company's operations span across five reportable segments: Northeast, South, West, Midwest, and Interactive. PENN Entertainment's main business activities include managing a portfolio of gaming facilities, which include casinos, hotels, and restaurants, as well as providing online gaming and sports betting services. The company's primary products and services encompass slot machines,...

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Investment thesis

Bull case

  • Tangible assets of 11.02B provide robust 12.70x coverage of other current liabilities 867.90M, indicating strong asset backing.
  • Operating cash flow of 503.90M fully covers other non-current liabilities 247.30M by 2.04x, showing strong long-term stability.
  • Cash reserves of 660.10M provide solid 2.67x coverage of other non-current liabilities 247.30M, indicating strong liquidity.
  • Operating cash flow of 503.90M provides strong 4.30x coverage of tax liabilities 117.30M, showing excellent fiscal position.
  • Cash reserves of 660.10M provide comfortable 5.63x coverage of tax obligations 117.30M, showing strong fiscal management.

Bear case

  • Operating cash flow of 503.90M barely covers its investment activities of (531.80M), with a coverage ratio of -0.95, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating earnings of (441.60M) show weak coverage of depreciation charges of 785.90M, with a -0.56 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (212M) provides weak coverage of capital expenditures of 715.90M, with a -0.30 ratio suggesting additional external financing needs for growth initiatives.
  • High depreciation of 785.90M relative to operating cash flow of 503.90M, which is 1.56x suggests significant maintenance capital requirements affecting free cash flow.
  • Free cash flow of (212M) represents just -1.40x of debt issuance 151.40M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Consolidation Items Breakdown of Revenue (2024)

Peer comparison

Companies in the Resorts & Casinos
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LVS Las Vegas Sands Corp 39.82 Bn 24.48 3.06 15.78 Bn
2 WYNN Wynn Resorts Ltd 20.12 Bn 2,860.00 4.09 12.20 Bn
3 MGM MGM Resorts International 9.16 Bn 44.51 0.52 31.26 Bn
4 BYD Boyd Gaming Corp 8.33 Bn -92.47 2.92 2.46 Bn
5 MTN Vail Resorts Inc 4.91 Bn 196.79 4.35 3.38 Bn
6 HGV Hilton Grand Vacations Inc. 4.44 Bn 83.82 0.89 7.28 Bn
7 CZR Caesars Entertainment, Inc. 3.93 Bn -7.83 0.34 24.88 Bn
8 RRR Red Rock Resorts, Inc. 3.66 Bn 20.78 2.12 3.41 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.85 1.18
EV to Cash from Ops. EV/CFO 24.11 39.36
EV to Debt EV to Debt 1.09 32.02
EV to EBIT EV/EBIT -27.52 44.55
EV to EBITDA EV/EBITDA 148.73 19.91
EV to Free Cash Flow [EV/FCF] EV/FCF -57.32 -82.04
EV to Market Cap EV to Market Cap 7.03 4.40
EV to Revenue EV/Rev 1.78 4.33
Price to Book Value [P/B] P/B 0.88 3.49
Price to Earnings [P/E] P/E -1.91 199.09
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.40
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 38.73
Dividend per Basic Share Div per Share (Qtr) 0.00 1.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 21.58
Interest Coverage Int. cover (Qtr) -1.06 -1.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -53.04 7.02
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -20.85 3.69
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 6.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -321.64 -15.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -85.59 -13.29
EBIT Growth (1y) % EBIT 1y % (Qtr) -259.32 -1.32
EBT Growth (1y) % EBT 1y % (Qtr) -43.57 -10.90
EPS Growth (1y) % EPS 1y % (Qtr) -78.47 9.03
FCF Growth (1y) % FCF 1y % (Qtr) 28.43 81.04
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 18.60 4.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.11
Cash Ratio Cash Ratio (Qtr) 0.46 0.59
Current Ratio Curr Ratio (Qtr) 0.75 0.90
Debt to Equity Ratio Debt/Equity (Qtr) 5.70 4.57
Interest Cover Ratio Int Coverage (Qtr) -1.06 -1.90
Times Interest Earned Times Interest Earned (Qtr) -1.06 -1.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.00 18.45
EBIT Margin % EBIT Margin % (Qtr) -6.47 11.71
EBT Margin % EBT Margin % (Qtr) -12.59 4.06
Gross Margin % Gross Margin % (Qtr) 33.60 47.91
Net Profit Margin % Net Margin % (Qtr) -13.20 2.46