Penn National Gaming, Inc. PENN recently announced that it will reopen five properties in Mississippi. On May 18, the company reopened five casino properties in Louisiana, representing 25% of its portfolio of regional casino assets. Following the news, the company’s shares surged 13% yesterday.
Penn National will be reopening the 1st Jackpot Casino Tunica, Ameristar Casino Hotel Vicksburg, Boomtown Casino Biloxi, Hollywood Casino Gulf Coast and Hollywood Casino Tunica properties on May 21. However, the reopening is subject to regulatory approval.
Upon reopening, these properties are likely to operate with limited amenities and capacity restrictions in accordance with the state and regulatory guidelines. Notably, the company has initiated property-specific social distancing and safety protocols to ensure well-being of its guests and employees.
President and CEO of Penn National, Jay Snowden stated, “Penn National is very well-positioned to resume its positive momentum that was cut short in mid-March by the COVID-19 pandemic. Our geographic diversification across 19 states - with no more than 15% of our revenues being derived from any single state - should be a significant benefit as states begin to open casinos on a sequential basis.”
So far this year, shares of Penn National have risen 4.9% compared with the industry’s 32% fall.
Strategic Plans to Fight the Pandemic
Penn National has taken certain strategic measures to protect business in this crisis. This includes reduction in operating and capital expenditures.
Notably, to mitigate the operational and financial impact of the COVID-19 pandemic, the company decided to furlough part of its corporate workforce as well as reduce compensations of the executive committee. In the wake of the current scenario, the company has withdrawn its 2020 guidance.
Although the virus has triggered a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. We believe that it will continue to monitor the COVID-19 crisis and adjust contingency plans accordingly.
Penn National — which shares space with Caesars Entertainment Corporation CZR, MGM Resorts International MGM and Red Rock Resorts, Inc. RRR in the Zacks Gaming industry — has a Zacks Rank #4 (Sell) at present.
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