4. PENN Entertainment, Inc. (NASDAQ:PENN)
Number of Hedge Fund Holders: 30
Share Price as of December 5: $34.79
PENN Entertainment, Inc. (NASDAQ:PENN) provides integrated entertainment, sports content, and casino gaming experiences in North America. On November 14, Penn Entertainment rose 6.2% on speculation of a potential activist investor interest. On November 3, PENN National posted earnings for the third quarter of 2022, reporting earnings per share of $0.72, beating market estimates by $0.37. The revenue over the period was $1.6 billion, up 6.0% compared to the revenue over the same period last year and beating market estimates by $20 million.
On November 3, CBRE analyst John DeCree maintained a Buy rating on PENN Entertainment, Inc. (NASDAQ:PENN) stock and lowered the price target to $54 from $57, highlighting that the company’s third-quarter results were solid with better casino trends offsetting a slightly wider than expected interactive loss due to some one-time items.
At the end of the third quarter of 2022, 30 hedge funds in the database of Insider Monkey held stakes worth $423.8 million in PENN Entertainment, Inc. (NASDAQ:PENN), compared to 33 in the previous quarter worth $455.8 million.
In its Q3 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and PENN Entertainment, Inc. (NASDAQ:PENN) was one of them. Here is what the fund said:
“Shares of gaming company PENN Entertainment, Inc. (NASDAQ:PENN) declined 9.6% in the quarter and penalized performance by 10 bps. This was due to investor concerns that a potential recession would result in a slowdown or decline in its earnings growth rate. However, thus far, the company has seen no material change in visitation or spending levels, and its earnings remain strong. PENN is generating strong cash flow, which it continues to use to invest in its digital growth opportunity while using excess cash to buy back its stock. PENN is well positioned to weather a slowdown or recession, and we believe that even if one does occur, the company would still generate revenue and EBITDA above pre-pandemic levels. We consider the $50 million of losses this year from its digital business to be modest about PENN’s over $1 billion of EBITDA from its casino business. The losses from its digital business represent customer acquisition costs incurred as additional states legalize online gambling. Since it is far less expensive to retain existing customers than to acquire new ones, we expect marketing costs to decline as PENN builds its customer base. PENN’s core bricks and mortar casino business remains strong, and the company’s healthy regional casino business and strong balance sheet enable it to absorb its digital losses.”
