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PENN Entertainment (PENN) Q4 Earnings Lag Estimates, Falls Y/Y

PENN Entertainment, Inc. PENN reported mixed fourth-quarter 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top line rose year over year, while the bottom line declined year over year. Following the results, the company’s shares dropped 5.4% during trading hours on Feb 2.

Earnings & Revenue Discussion

In the quarter under review, the company reported adjusted earnings per share (EPS) of 13 cents missing the Zacks Consensus Estimate of 33 cents by 60.6%. In the prior-year quarter, the company reported an adjusted EPS of 26 cents.

During the fourth quarter, total revenues of $1,585.6 million beat the Zacks Consensus Estimate of $1,584 million. The top line increased 0.8% on a year-over-year basis. The upside was backed by an omnichannel strategy, solid retail operations and new interactive offerings.

PENN Entertainment, Inc. Price, Consensus and EPS Surprise

PENN Entertainment, Inc. Price, Consensus and EPS Surprise
PENN Entertainment, Inc. Price, Consensus and EPS Surprise

PENN Entertainment, Inc. price-consensus-eps-surprise-chart | PENN Entertainment, Inc. Quote

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The Northeast segment delivered revenues of $667.1 million, up 1.6% year over year. Revenues from Interactive and other segments came in at $208 million and $3.9 million compared with $157.6 million and $3.8 million, respectively, in the prior-year quarter.

Revenues from the South, West and Midwest segments came in at $304.4 million, $130.7 million and $282 million, down 10.4%, 5.8% and 1.9%, respectively, on a year-over-year basis.

Operating Headlines

During the fourth quarter, adjusted EBITDAR declined 2.5% from the year-ago quarter’s level to $468.3 million. Adjusted EBITDAR margin contracted 110 basis points to 29.5%.

Other Financial Information

As of Dec 31, 2022, the company had cash and cash equivalents of $1,624 million compared with $1,863.9 million as of Dec 31, 2021. Bank debt as of Dec 31, 2022, was $1,531.2 million, down from $1,563.7 million at 2021-end.

For the third quarter, the company repurchased 2,870,894 shares of its common stock worth approximately $91 million. As of Feb 1, 2023, the company stated availability of $117.8 million (under its February 2022 authorization) and $750.0 million (under its December 2022 authorization).

2022 Highlights

Total revenues in 2022 amounted to $6,401.7 million compared with $5,905 million in 2021.

Adjusted EBITDA in 2022 totaled $1,789.8 million compared with $1,540 million in 2021.

In 2022, diluted EPS came in at $1.29 compared with $2.48 reported in the previous year.

2023 Guidance

For 2023, the company anticipates revenues in the range of $6.2-$6.6 billion. Adjusted EBITDAR during the year is anticipated in the range of $1.9-$2.0 billion.

Zacks Rank & Key Picks

PENN Entertainment currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited. OSW, Manchester United plc MANU and Las Vegas Sands Corp. LVS.

OneSpaWorld currently sports a Zacks Rank #1 (Strong Buy). OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 6.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OSW’s 2023 sales and earnings per share (EPS) indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.

Manchester currently carries a Zacks Rank #2 (Buy). MANU has a trailing four-quarter earnings surprise of 65.7%, on average. Shares of the company have gained 63.9% in the past year.  

The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago levels.  

Las Vegas Sands currently carries a Zacks Rank #2. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 30.7% in the past year.

The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 97% and 217.5%, respectively, from the year-ago period’s estimated levels.

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