The company, which owns and manages 25 gaming and pari-mutuel properties across 18 states, reported its first quarter net income was $4.54 million or $0.05 per share, down from $65.27 million or $0.63 per share, in the same quarter for 2013.
First quarter 2014 net revenue also fell, to $641.08 million from $798.25 million in the same quarter in 2013.
For fiscal 2014, the company lowered its expected net income to $10.4 million or $0.12 per share on $2.51 billion in revenue, from $21.9 million or $0.24 per share, on $2.63 billion in revenue.
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TheStreet Ratings team rates PENN NATIONAL GAMING INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PENN NATIONAL GAMING INC (PENN) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- The debt-to-equity ratio of 1.39 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, PENN maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.
- 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, PENN NATIONAL GAMING INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for PENN NATIONAL GAMING INC is currently lower than what is desirable, coming in at 31.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -137.85% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $12.84 million or 92.41% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: PENN Ratings Report