A better-than-expected third quarter and bullish guidance helped Penn National Gaming ( PENN) shares avoid the selloff afflicting the gambling sector. Most other casino stocks slumped on continued general investor pessimism exacerbated by analyst downgrades Thursday on Harrah's Entertainment ( HET), MGM Mirage ( MGM), Wynn Resorts ( WYNN) and Boyd Gaming ( BYD). The Dow Jones U.S. Gambling Index was down 1.7% late in the session. Penn National went counter to the trend, its shares rallying $1.32, or 5%, to $27.62, as the company's third-quarter report offered enough positives for investors to shrug off a downgrade from KeyBanc Capital Markets. The Wyomissing, Pa., casino operator reported third-quarter earnings of $55.4 million, or 64 cents a share, up from $17.2 million, or 21 cents a share, a year before. During the quarter, Penn National incurred $19.1 million of pretax expenses related to Hurricane Katrina but recorded an after-tax gain of $35.6 million from the sale of the Hollywood Casino-Shreveport. Excluding those items, Penn National had adjusted earnings of 37 cents a share, well ahead of the 31-cent average Wall Street estimate from Thomson First Call. Revenue was $294.6 million, up from $288.6 million a year before but less than the $297.1 million consensus forecast. Although Hurricane Katrina damaged Penn National's Casino Magic-Bay St. Louis and Boomtown Biloxi casinos, its properties elsewhere delivered strong results, particularly its Baton Rouge casino, which saw a spike in traffic in the aftermath of the hurricane. The Charles Town, Hollywood Casino-Aurora and Casino Rama all saw double-digit percentage increases in earnings before interest, taxes, depreciation and amortization, or EBITDA. Penn National's results didn't include the acquisition of Argosy Gaming, which was completed on the first business day of the fourth quarter. The company's guidance also encouraged investors. Penn National expects fourth-quarter adjusted earnings of 42 cents a share, ahead of the 38-cent consensus. For the full year, Penn National forecasts a profit of $1.48 a share, up from its previous guidance of $1.30 and better than the $1.40 analyst consensus.