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Penn National Gaming Shares Plunge on Weak Profit Numbers

Penn's net income dropped to 52 cents a share in the third quarter from 93 cents a year ago. Analysts predicted 85 cents for the latest quarter.
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Penn National Gaming PENN shares plunged Thursday, after the diversified gambling company reported third-quarter profit far below analysts’ estimates.

The stock tumbled 16% to $60.75 in recent trading. It has skidded 33% in the last six months.

Profit dropped to $86.1 million, or 52 cents a share, in the third quarter from $141.9 million, or 93 cents a share, a year earlier. The FactSet analyst consensus called for 85 cents in the latest quarter.

Revenue jumped 33.8% to $1.51 billion from $1.13 billion a year ago. The latest figure matched the FactSet consensus.

Gaming revenue climbed 26% to $1.26 billion, while food, beverage, hotel and other revenue soared 88% to $255.6 million. But operating expenses exploded 36% upward.

“While July was a record month, the second half of August and September were impacted by Hurricane Ida and regional flare-ups of the delta variant,” said Penn National CEO Jay Snowden

That “reduced property adjusted EBITDAR [earnings before interest, taxes, depreciation, amortization, and rent] and adjusted EBITDAR margins by … $30 million and 85 basis points, respectively,” he said.

“As the operating environment has normalized, we have seen improved results in October. Further, other segment results included a $12.5 million lobbying expense to support the California sports betting initiative and $7.5 million in expenses related to new state launches of our Barstool Sportsbook app.”

Last month, J.P. Morgan reiterated its overweight rating on Penn National. 

“We highlight the stock as an interesting idea into year-end given high short interest/negative investor sentiment, an undemanding valuation, … and relatively solid land-based casino operations,” the bank said.