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Barbarian At The Gate: Penn National Gaming (PENN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Penn National Gaming (PENN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Penn National Gaming as such a stock due to the following factors:

  • PENN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.6 million.
  • PENN has traded 864,063 shares today.
  • PENN traded in a range 232.9% of the normal price range with a price range of $1.06.
  • PENN traded above its daily resistance level (quality: 49 days, meaning that the stock is crossing a resistance level set by the last 49 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PENN:

Penn National Gaming, Inc., together with its subsidiaries, owns and manages gaming and pari-mutuel properties in the United States and Canada. It engages in gaming on slot machines and table games. Currently there are 7 analysts that rate Penn National Gaming a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Penn National Gaming has been 1.9 million shares per day over the past 30 days. Penn National Gaming has a market cap of $939.8 million and is part of the services sector and leisure industry. The stock has a beta of 0.83 and a short float of 10.8% with 4.81 days to cover. Shares are down 11.5% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Penn National Gaming as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • 42.49% is the gross profit margin for PENN NATIONAL GAMING INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -137.85% is in-line with the industry average.
  • PENN, with its decline in revenue, slightly underperformed the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 13.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PENN NATIONAL GAMING INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PENN NATIONAL GAMING INC swung to a loss, reporting -$10.53 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($0.24 versus -$10.53).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 77.45%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 6100.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 4491.3% when compared to the same quarter one year ago, falling from $20.24 million to -$888.75 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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