Trade-Ideas: Pinnacle Entertainment (PNK) Is Today's

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 Pinnacle Entertainment ( PNK) 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 Pinnacle Entertainment as such a stock due to the following factors:

  • PNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.0 million.
  • PNK has traded 659,456 shares today.
  • PNK traded in a range 208.4% of the normal price range with a price range of $1.16.
  • PNK traded above its daily resistance level (quality: 533 days, meaning that the stock is crossing a resistance level set by the last 533 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 PNK:

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. The company operates casinos, such as L'Auberge Lake Charles in Lake Charles, Louisiana; River City Casino and Lumiere Place Casino in St. Currently there are 10 analysts that rate Pinnacle Entertainment a buy, 3 analysts rate it a sell, and 4 rate it a hold.

The average volume for Pinnacle Entertainment has been 990,400 shares per day over the past 30 days. Pinnacle Entertainment has a market cap of $1.4 billion and is part of the services sector and leisure industry. The stock has a beta of 1.77 and a short float of 14.3% with 8.50 days to cover. Shares are down 5.7% year-to-date as of the close of trading on Friday.

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 Pinnacle Entertainment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • PNK's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 77.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 119.71% and other important driving factors, this stock has surged by 70.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • PINNACLE ENTERTAINMENT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PINNACLE ENTERTAINMENT INC reported poor results of -$2.29 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus -$2.29).
  • The debt-to-equity ratio is very high at 19.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, PINNACLE ENTERTAINMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.

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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