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On Thursday, Stifel analysts maintained their Hold rating on PENN Entertainment Inc (NASDAQ:PENN) with a consistent price target of $21.00. The company’s fourth-quarter adjusted EBITDAR fell short of the headline consensus by 1% but surpassed normalized estimates by 5%, considering adjustments for unfavorable outcomes in December. Retail adjusted EBITDAR aligned with consensus expectations and was 2% above the midpoint of the company’s guidance. According to InvestingPro data, PENN operates with a significant debt burden of $11.3 billion and a concerning debt-to-equity ratio of 3.69, factors that warrant careful consideration for investors.
PENN Entertainment’s growth has been in line with the broader regional Gross Gaming Revenue (GGR), which has shown a positive inflection. The firm’s disclosures indicated a better-than-expected impact from December’s outcomes, which mostly contributed to the Interactive segment’s losses. Management highlighted positive developments, including an encouraging parlay mix expansion, which represented over 30% of the handle in December and January. Additionally, the company’s iCasino Net Gaming Revenue (NGR) saw a significant year-over-year increase of 61%, which precedes the rollout of their standalone product. With a market capitalization of $2.88 billion and trailing twelve-month EBITDA of $417.9 million, the company’s current stock price of $19.33 reflects its volatile trading pattern.
Although PENN did not disclose its FY25 guidance in the earnings release or presentation, Stifel analysts anticipate that it will be introduced during the company’s conference call. In a strategic move demonstrating fiscal discipline while still investing in ESPN Bet, PENN announced a commitment to repurchase at least $350 million worth of shares by the end of 2025. This buyback plan represents 47% of the existing authorization.
Stifel analysts concluded their remarks by reiterating their Hold stance on PENN Entertainment stock. They expressed intentions to provide further insights after PENN’s scheduled conference call at 9 am ET.
In other recent news, Penn Entertainment reported its fourth-quarter financial results, which did not meet analyst expectations. The company posted an adjusted loss of $0.44 per share, wider than the anticipated $0.29 loss. Revenue for the quarter was $1.4 billion, falling short of the consensus estimate of $1.69 billion. Despite these results, Penn Entertainment announced a plan to repurchase at least $350 million of its shares in 2025, indicating confidence in its future prospects. CEO Jay Snowden noted solid performance in properties unaffected by new competition and highlighted improvements in the company’s Interactive segment, which includes online sports betting and casino games. The Interactive segment reported revenues of $275 million but faced an adjusted EBITDA loss of $109.8 million as the company continues to invest in growth. Additionally, Penn Entertainment ended the quarter with $706.6 million in cash and total traditional debt of $2.6 billion. The lease-adjusted net leverage ratio was 7.3x as of December 31, 2024.
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