Peter Reznicek is the founder of ShadowTrader.net and writer of Peter’s Premarket Perspective, a morning market profile blog to help people plan their trading day and organize their thoughts before the market opens. Reznicek provides his insight on Penn National Gaming and other gambling stocks with PlayPennsylvania. He’s on Twitter @PeterReznicek and can be reached at [email protected].
Pennsylvania-based Penn National Gaming attracts gambling stock headlines. In Jan. 2020, Penn National Gaming purchased a 36% stake in Barstool Sports which was founded by Dave Portnoy.
What’s happening with Penn National Gaming
$PENN is the largest and most diversified regional gaming company in the United States. With the addition of Hollywood Casino Morgantown in Pennsylvania in late December 2021, it has 44 casinos across 20 states.
Penn National Gaming put in a bid to operate its online sportsbook (Barstool) in New York but was not selected. Online sports betting in New York blew away expectations. Over the course of nine days (Jan.8 – Jan 16), four sports betting apps combined to take $603.1 million in bets.
Penn National Gaming stock high and low
During the last six months, $PENN share price reached a high of $84.84 on Sept. 9. On Jan. 21, it’s $42.55.
“During this time period where PENN has been effectively cut in half, all-important moving averages are now sloping downwards and the stock now has two downtrends, one longer term and one shorter term.
“In the graphic above, the blue, red, and green lines are the 200, 50, and 20-period simple moving averages. When a stock is rallying and “healthy”, the moving averages should be stacked underneath price from shortest to longest in terms of number of days calculated. Note how PENN has the exact opposite dynamic in its moving averages with the 20, 50, and 200 stacked respectively above the current price. This tells us that PENN is underperforming in the long term, medium term, and short term.
There are also two trend lines drawn from those recent highs which illustrate where the tide would turn for PENN both in the shorter-term (point 2) and the longer-term (point 1).”
Truist Securities has “Buy” rating and $70 price target for $PENN stock
Penn National Gaming Equities researchers at Truist Securities lowered their FY2022 EPS estimates for Penn National Gaming in a report issued on January 13th. Truist Securities analyst B. Jonas anticipates that the company will post earnings per share of $2.00 for the year, down from their prior estimate of $2.39. Truist Securities has a “Buy” rating and a $70.00 price target on the stock.
“Analyst ratings and targets should be taken with a grain of salt and not necessarily indicative of what is actually happening in the price action of the stock both present and future. The chart above shows clearly where investors should regain confidence and start to repurchase PENN shares. While the stock remains below all trends and moving averages, there is no reason to initiate a position at this time, regardless of analyst ratings or targets.”
Penn National Gaming 2021 Q4 results
Penn National Gaming will release its 2021 fourth-quarter financial results on February 3. What are some of the things you think investors should look for?
“While the company has posted steadily positive EPS since their Oct. 29, 2020 report, the results have been rather inconsistent, often posting solid results in one quarter only to have them cut in half or more the next. Their average EPS over this period is $0.64 per quarter. As the stock sometimes experiences price rises even in quarters of falling EPS and vice versa, it is apparent that it trades more on sector sentiment than on fundamentals. Note how the chart of the $DJUSCA (Dow Jones U.S. Gambling Index) which represents all gaming stocks is very similar to the PENN chart.
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