NEW YORK (TheStreet) -- Penn National Gaming (PENN) stock has been downgraded to "underweight" with a $10 price target, Morgan Stanley said Thursday. The firm said the revision was due to expected ongoing regional weakness.
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 multiple 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 disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 93.0% when compared to the same quarter one year ago, falling from $65.27 million to $4.54 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 80.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 92.06% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- PENN NATIONAL GAMING INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PENN NATIONAL GAMING INC swung to a loss, reporting -$10.53 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$10.53).
- PENN, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues fell by 19.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 43.28% is the gross profit margin for PENN NATIONAL GAMING INC which we consider to be strong. Regardless of PENN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PENN's net profit margin of 0.70% is significantly lower than the industry average.
- You can view the full analysis from the report here: PENN Ratings Report