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Is PENN Entertainment (PENN) Undervalued Following Deutsche Bank's Upgrade And NFL Partnership?

Simply Wall St · 2d ago

PENN Entertainment (PENN) drew fresh attention after Deutsche Bank upgraded the stock and highlighted an improved sector risk reward, while its theScore Bet unit signed a multiyear NFL betting and online casino partnership in Canada.

For context, PENN Entertainment’s share price has moved sharply around these headlines, with a 5.36% 1-day share price return and 8.90% 7-day share price return, yet it is still down 20.92% on a 90-day share price basis and its 1-year total shareholder return is down 11.27%. This suggests that recent momentum is improving from a weak longer-term backdrop as investors reassess both growth prospects and perceived risk.

Capitalize on the rebound story around PENN Entertainment by scanning a curated set of consumer and leisure operators with improving sentiment using the 27 high quality undervalued stocks.

PENN Entertainment now appears to be a stronger operating story than its long-term share chart implies. After this sharp bounce, is that improving business still available at an attractive valuation, or is it already fully reflected in the price?

Most Popular Narrative: 35% Undervalued

The most followed narrative on PENN Entertainment pegs fair value at $24.39, compared with the last close at $15.91. This points to a wide gap that hinges on whether its projects and partnerships deliver.

The upcoming ramp-up and margin accretion from four new or relocated, efficiency-focused retail projects, along with property-level investments in non-gaming amenities and partnerships (e.g., hotel and golf entertainment), will combine to offset headwinds from new supply, drive higher per-guest spend, and support long-term EBITDA expansion and margin improvement.

See why 16 investors see PENN Entertainment as 35% undervalued.

This storyline uses a 12.54% discount rate and assumes PENN Entertainment can move from a loss of $906.7 million on $7.16b of revenue today to profit margins of about 5.6% over time, helped by projects like Hollywood Casino Aurora, the New Orleans conversion and the ESPN integration. It also leans on analyst expectations that earnings will grow fast enough to support a future P/E of around 8.3x on 2029 estimates, with a consensus fair value of $24.39 that sits well above the recent share price.

On this view, PENN Entertainment screens as undervalued partly because the current market value of about $1.9b and a share price of $15.91 imply a steep discount to both analyst targets and the narrative fair value, even as analysts remain in reasonable agreement about future profitability. At the same time, the story clearly flags real pressure points, including an unprofitable digital arm, higher gaming taxes, heavy use of debt funding and structurally weaker legacy retail markets, which all need to be weighed against the potential upside from omni-channel growth and new properties.

Result: Fair Value of $24.39 (UNDERVALUED)

Still, PENN Entertainment’s loss of $906.7 million and ongoing pressure in legacy retail markets leave plenty of room for the bullish narrative to be challenged.

Find out about the key risks to this PENN Entertainment narrative.

Next Steps

If this PENN Entertainment story feels finely balanced between risk and reward, consider acting promptly, reviewing the details yourself, and weighing what investors see in its 4 key rewards.

Looking for more investment ideas beyond PENN Entertainment?

If PENN Entertainment has sharpened your focus on risk and reward, use that momentum to scan other opportunities that could better match your portfolio goals.

Missing the right short list can affect your potential returns over time, so line up alternatives now using the Simply Wall St Screener.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.