Has Pinnacle Entertainment, Inc (PNK) Become the Perfect Stock?

As a gaming company, Pinnacle isn’t a household name for those who tend to focus on Macau and Las Vegas. But throughout the center of the U.S., Pinnacle casinos do business in New Orleans, St. Louis, and smaller river markets.

But Pinnacle announced some big news recently when it agreed to an $870 million acquisition of Ameristar Casinos, Inc. (NASDAQ:ASCA). With Ameristar’s presence in the Midwestern and southern U.S., Pinnacle will go a long way toward building out its stronghold in America’s heartland. Yet the deal also adds to Pinnacle’s debt load, with the assumption of $1.9 billion of Ameristar’s debt. If approved by the FTC, the deal should close in the middle of 2013.

Lately, though, regional gaming has sounded a dour note. Rival Penn National Gaming, Inc (NASDAQ:PENN) failed to meet its own guidance in its most recent quarterly report, as it cited a downbeat mood among its customers as hurting its results. Moreover, although Caesars Entertainment Corp (NASDAQ:CZR) has seen signs of life in its Las Vegas properties, it also has big exposure in the same markets Pinnacle occupies, and Caesars similarly has a huge debt overhang.

For Pinnacle to improve, it needs the overall U.S. economy to get better and give its customers more disposable income. Until that happens, none of the regional companies mentioned here will have as strong prospects as the international gaming companies with which most investors are more familiar.

The article Has Pinnacle Entertainment Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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