On August 6, PENN Entertainment (NASDAQ:PENN) reported second-quarter results that flipped from a year-ago loss into a profit. Net income came in at $32.6 million, compared with a loss of $18.3 million in the same quarter of 2025. Revenue rose to $1.86 billion from $1.77 billion, and Adjusted EBITDA climbed to $312.6 million from $236.1 million. Diluted earnings per share landed at $0.24, versus a loss per share of $0.12 a year earlier. For a company whose digital business has weighed on results for years, that combination stands out.
Record Retail Quarter, Cash Piling Up
The Retail segment, which covers PENN’s casino properties across the Northeast, South, West and Midwest, generated $1.5 billion in revenue and $517.2 million in Segment Adjusted EBITDAR, a margin of 34.4%. Nine properties posted their best second quarter ever for both revenue and Adjusted EBITDAR, a sign the strength wasn’t confined to one or two markets. June brought two new additions to the portfolio: a hotel tower at Hollywood Columbus and the new Hollywood Casino Aurora, both of which the company said are already drawing strong visitation.
The balance sheet also moved in the right direction. Total liquidity stood at $1.9 billion as of June 30, including $887.2 million in cash. Traditional net debt fell to $1,927.5 million from $2,217.5 million at the end of 2025, pulling traditional net leverage down to 2.9 times from 4.5 times over that span. Capital expenditures dropped to $97.5 million in the quarter from $159.4 million a year earlier. On May 15, PENN repaid the remaining $106.7 million balance of its 2.75% convertible notes, wiping out roughly 4.6 million potentially dilutive shares in the process.
Digital Bets And Balance Sheet Baggage
The Interactive segment still lost money, an Adjusted EBITDA loss of $9.5 million, though that’s a sharp improvement from the $62.0 million loss posted in the second quarter of 2025. Revenue for the segment reached $349.4 million, but $185.5 million of that figure came from a tax gross-up rather than actual wagering activity, a distinction that matters when sizing up the segment’s real growth. PENN also leaned on refinancing to manage its debt load rather than paying it down outright: on April 16, it extended its $1.0 billion revolving credit facility and $446.9 million term loan A to 2031, and on May 28, it repriced and extended its term loan B facility to 2033.
Total traditional debt still sat at $2,814.7 million at quarter’s end. Other expenses jumped to $43.0 million for the first six months of 2026 from just $2.2 million a year earlier, driven by transaction costs, severance tied to a corporate reorganization, and settlement costs connected to the company’s cooperation agreement with HG Vora Capital Management. Cash rent payments to REIT landlords also remained a heavy recurring cost, $247.1 million for the quarter alone.
Wall Street Splits On Turnaround
Hedge fund ownership tells a cautious story here, with the number of funds holding PENN falling to 41 from 54 in the prior quarter, a meaningful pullback in institutional interest. Short interest sits at 14.07% of float, which points to a sizable bear camp still positioned against the stock. Yet PENN trades at a forward P/E of just 8.67 as of September 2, a multiple that assumes little in the way of continued earnings growth. That combination, a cheap headline valuation alongside heavy short interest and departing funds, suggests the market hasn’t yet bought into the improvement showing up in the numbers.
Where The Story Goes From Here
The quarter leaves PENN with a clear tension: operating results and leverage ratios are moving in the right direction, but institutional investors have been trimming exposure even as the multiple stays low. For the bull case to hold, the Retail segment’s record performance needs to keep showing up alongside continued narrowing of Interactive segment losses.
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