Skip to main content

NEW YORK (TheStreet) -- Shares of Pinnacle Entertainment (PNK) - Get Pinnacle Entertainment Inc Report were gaining 7% to $39.70 on heavy trading volume after Gamingand Leisure Properties (GLPI) - Get Gaming and Leisure Properties, Inc. Report revised its bid for the casino operator's real estate assets.

Under the new offer Pinnacle shareholders 0.85 common shares of Gaming and Leisure Properties for each share of Pinnacle they own for the real estate assets, up from its previous offer of 0.5517 shares of Gaming and Leisure Properties.

The new offer values Pinnacle at $47.50 a share, up from $36 a share under the previous offer. Gaming and Leisure Properties said it secured committed financing for the offer, and is ready to finalize the transaction immediately.

About 1.7 million shares of Pinnacle Entertainment were traded by 10:52 a.m. Tuesday, above the company's average trading volume of about 792,000 shares a day.

TheStreet Recommends

TheStreet Ratings team rates PINNACLE ENTERTAINMENT INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PINNACLE ENTERTAINMENT INC (PNK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 7.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PINNACLE ENTERTAINMENT INC has improved earnings per share by 41.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PINNACLE ENTERTAINMENT INC turned its bottom line around by earning $0.63 versus -$2.28 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $0.63).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, PINNACLE ENTERTAINMENT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Powered by its strong earnings growth of 41.93% and other important driving factors, this stock has surged by 47.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The debt-to-equity ratio is very high at 12.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PNK has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: PNK Ratings Report