PENN Entertainment, Inc. PENN reported mixed first-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and the bottom line increased on a year over year basis. Following the results, the company’s shares dropped 13.7% during trading hours on May 5.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of 31 cents missing the Zacks Consensus Estimate of 38 cents by 18.4%. In the prior-year quarter, the company reported an adjusted EPS of 29 cents.
During the first quarter, total revenues of $1,673.3 million beat the Zacks Consensus Estimate of $1,601 million. The top line increased 7% on a year-over-year basis. The upside was driven by solid performance in the Northeast segment.
PENN Entertainment, Inc. Price, Consensus and EPS Surprise
PENN Entertainment, Inc. price-consensus-eps-surprise-chart | PENN Entertainment, Inc. Quote
The Northeast segment delivered revenues of $700.5 million, up 6.4% year over year. Revenues from Midwest, Interactive and other segments came in at $295.3 million, $233.5 million and $5.8 million compared with $282.9 million, $141.5 million and $7.3 million, respectively, in the prior-year quarter.
Revenues from the South and West segments came in at $314.8 million and $129.7 million, down 7.8% and 7.9%, respectively, on a year-over-year basis.
During the first quarter, adjusted EBITDAR declined 3.3% from the year-ago quarter’s level to $478.2 million. Adjusted EBITDAR margin contracted 300 basis points to 28.6%.
Other Financial Information
As of Mar 31, 2023, the company had cash and cash equivalents of $1,311.3 million compared with $1,624 million as of Dec 31, 2022. Bank debt as of Mar 31, 2023, was $1,521.9 million, down from $1,531.2 million at 2022-end.
During the first quarter, the company repurchased 1,646,963 shares of its common stock worth approximately $50 million. As of May 3, 2023, the company stated availability of $80.4 million (under its February 2022 authorization) and $750.0 million (under its December 2022 authorization).
For 2023, the company anticipates revenues in the range of $6.4-$6.8 billion, up from the previous expectation of $6.2-$6.6 billion. Adjusted EBITDAR during the year is anticipated in the range of $1.9-$2.0 billion.
Zacks Rank & Key Picks
PENN Entertainment currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Boyd Gaming Corporation BYD, Crocs, Inc. CROX and PlayAGS, Inc. AGS.
Boyd Gaming carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 16.5% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 1.9% and 2.6%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 67.3% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.
PlayAGS carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 133.3%, on average. The stock has declined 21% in the past year.
The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,856.7%, respectively, from the year-ago period’s estimated levels.
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