Domestic casino and gaming operator PENN Entertainment (NASDAQ: PENN)
stock has changed its name to reflect the nature of its gaming businesses. The stock is trading down (-32%) for the year, but the Company has been profitable
throughout the pandemic whiles it’s competitors like Las Vegas Sands (NYSE: LVS)
, and Wynn Resorts (NASDAQ: WYNN)
are still bleeding red. It’s major online sports
gambling and iGaming competitor DraftKings (NASDAQ: DKNG)
is still suffering hundreds of millions in losses
. It also helps that PENN is a purely domestic casino chain that doesn’t have to worry about exposure to the uncertainty of China lockdowns, Macau closures, and communist regulators. The Company just took 100% ownership of the popular Barstool Sports app just in time for the NFL football betting season. The transaction is expected to close by February 2023. The combination of physical locations and online interactive gambling enables a synergistic network effect where customers can gain comps and prizes while staying connected to the brand from virtually anywhere. PENN is able to reach, or rather PENN’s customers are able to reach them in multiple channels in a cashless, cardless, and contact less manner.
Omnichannel Gambling… Gaming
Formerly Penn National Gaming, PENN Entertainment is the new name that more accurately describes the nature of its business which is gambling through multiple channels. The Company operates 44 properties in 20 states and digital sports betting in 13 jurisdictions with iCasino gaming in five of them. It operates in five segment locations including Northeast, South, West, Midwest and Interactive. The gambling industry has purposely replaced the sinful term gambling, which tends to have negative connotations with images of hardcore addiction, to gaming, a softer light-hearted term inferring wholesome fun and entertainment like videogames. PENN offers all forms of gaming from casino games and slot machines to racetrack and sports betting on-premise or online to appease all appetites.
Massachusetts becomes the next state on the docket to legalize sports betting. On Aug. 1, 2022, legislators agreed on a bill to legalize both professional and college football betting. Bets can only be placed by those 21 years and older and are subject to a 15% tax on in-person wagers in the casinos and 20% tax online. One of the key selling points was the $60 million to $65 million in tax revenues for the state. As part of the compromise, no betting will be allowed for games involving Massachusetts-based schools unless they are post-season, like a March Madness. There will be six mobile betting licenses and Penn is very likely to claim one. It currently has a horse racing and slot machine parlor in Plainview, Massachusetts that can benefit from the addition of a sportsbook. Additionally, their Bar Stool Sports app originated in Boston, making it very popular for the college and millennial crowd.
A New Dawn, Sort Of
On Aug. 4, 2022, PENN released its fiscal year Q2 2022 earnings for the quarter ending June 2022. The Company reported a GAPP profit of $0.15 per share versus consensus analyst estimates for a profit of $0.50 per share, missing by (-$0.35). Revenues grew 5.4% year-over-year (YoY) to $1.63 billion beating consensus estimates for $1.61 billion. PENN reaffirmed its full-year 2022 revenue guidance of $6.15 billion to $6.55 billion versus $6.36 billion consensus analyst estimates. Penn Gaming CEO Jay Snowden commented, “Today is an exciting day for us as we become PENN Entertainment, Inc. Over the past few years, PENN has transformed our business through a highly differentiated strategy focused on organic cross-sell opportunities, which is reinforced by our investments in market-leading retail casinos, sports media assets, owned technology, including a state-of-the-art, fully integrated digital sports and online casino betting platform, and an in-house iCasino content studio. Our new name maintains ties to our legacy while better reflecting our evolution into North America’s leading provider of integrated entertainment, sports content and casino gaming experiences.”
Here’s What the Charts Say
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for PENN stock. The weekly rifle chart bottomed off the $26.96 Fibonacci (fib) level and staged a rally on the weekly market structure low (MSL) buy trigger through $31.95. The weekly 5-period moving average (MA) support went flat at $34.91 and 15-period MA at $32.53. The weekly stochastic mini pup powered the rise to towards the 70-band. The weekly upper Bollinger Bands (BBs) sit at $40.23. The daily uptrend is starting to reverse as the 5-period MA at $36.35 starts to fall towards the 15-period MA at $15.77. The 50-period MA is flat at $32.62 with daily lower BBs overlapping the weekly MSL trigger at $31.95. The daily stochastic abruptly reversed back down under the 60-band indicating a momentum shift back down. Attractive pullback levels sit at the $32.14 fib, $30.89, $29.71 fib, $28.30, $26.96 fib, $24.74, and the $22.54 sticky 2.50s level.
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