Simply because a stock’s cost is sliding that doesn’t miserly the fellowship can’t generate increasing earnings per share (EPS). Penn National Gaming (NASDAQ:PENN) is a ground lesson of this scenario.
Credit Suisse recently screened S&P 500 fellow member firms for names with the compounding of faltering percentage prices, declining valuations and improving earnings. Penn National made the thinned and is the only gaming epithet among the 25 stocks highlighted by the bank.
While the medial company has seen their gillyflower terms descend -24.4% since its peak, the medial P/E multiple strike down -27.5%,” strategian Jonathan Golub wrote inwards a recent client note. “This difference is explained by a levelheaded 3.3% increment inward projected EPS.”
Like other cassino stocks, Penn is a travel and leisure equity, placing it inwards the consumer discretional sector. That’s one of the worst-performing groups this twelvemonth as highlighted by Penn’s 37.74% year-to-date decline. Fortunately, as Credit Suisse notes, earnings are improving among consumer cyclical names.
“On a median basis, all 11 sectors have got experient an advance in their earnings prospects. This disparity is most extreme for tech shares where the medial valuation has fallen -35.7%, piece earnings prospects make improved by 8.0%,” adds Golub.
Penn Particulars
Penn, the largest regional gambling casino operator, is undoubtedly battered. This year, that’s unusual among gaming equities.
Despite nearly in large quantities merchandising across the gaming stock up spectrum inward 2022, not all constituents inwards the place are offering value. Penn appears to be an exception. Following a drawdown of 78.6%, the casino stock’s price-to-earnings ratio collapsed by almost 81%, according to Seeking Alpha.
Based on those metrics, Penn experienced the biggest drawdown and largest P/E ratio go down among the 25 S&P 500 components mentioned by Credit Suisse.
Some analysts view the casino company’s strong first-quarter results as impressive when considering that geological period is usually seasonally weaker than the June and Sep quarters.
Potential William Penn Catalysts
While the broader gambling casino equity landscape is moribund for now and disconfirming seasonality could press on the aggroup over the near-term, William Penn could get some confirming surprises inwards salt away for investors as the support of 2022 unfolds.
Penn’s margins looking at conservativist and that the operator’s mini-casinos inward its home province of Pennsylvania are topping expectations and some analysts eyeshot the manipulator as offering to a greater extent attractive risk/reward congeneric to rivals.
Penn’s online business, which includes Barstool Sportsbook, is a decisive driver for the gillyflower and that could turn up all the to a greater extent useful if the theScore Bet grows market share inward Ontario, Canada. Earlier this year, the manipulator calculate a 2022 digital red ink of $50 million, advantageously below the archetype judge of $80 million.