Penn National Gaming (PENN) might look like a gamble thanks to recent volatility, but taking a look at the future growth it looks like a solid bet.
Company Description
Penn National Gaming owns and operates gaming and racing facilities, focusing on slot machines. The company operates 26 facilities and is in the process of developing 2 more.
Jackpot
On Jul 21 Penn National Gaming reported second quarter results that showed a 15% increase in revenues, to $688 million. That was more than $5 million above the company’s guidance.
Earnings per share almost doubled from $0.29 to $0.55 and was 6 cents higher than the company expected. Analysts were a bit more conservative, with a Zacks Consensus Estimate of $0.47, making the surprise that much better. Penn has topped forecasts in 5 of the past 6 quarters.
Analysts Placing Their Bets
Given the continually improving performance, analysts begin raising their estimates on the last quarterly report. Full-year estimate for 2011 are now averaging $2.03, up 32 cents and calling for a very strong finish to the year.
Next year’s Zacks Consensus Estimate is up 41 cents, to $2.24. These elevated estimates put annual growth rates at 28% and 10%, respectively.
Shares of PENN are going for 19 times the 2011 consensus, not exactly screaming value but not bad either. However, throw in that 24% expected growth rate and you get a PEG of 0.8 which shows a nice bargain.
Double Down
Big sell offs usually conjure up 2 different gut instincts. The first, involves 4-letter words and a rush to sell. But, some will see this big plunge as a good spot to double down and take advantage of a great deal. This Zacks #1 Rank (Strong Buy) is a solid bet to move higher from here.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
PENN NATL GAMNG (PENN): Free Stock Analysis Report
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