Their business strategy revolves around maintaining a highly differentiated portfolio with a significant focus on maximizing cross-selling opportunities. The gaming firm operates multiple well-recognized brands including Hollywood Casino, L'Auberge, and now ESPN Bet. The company is one of a few highly consolidated market leaders in the market and operates an impressive portfolio of online sports betting and iCasino businesses. PENN Entertainment is a North American provider of entertainment, sports content, and casino gaming experiences.

Therefore, I must downgrade PENN to a hold rating at the present time.

While the new ESPN Bet deal and launch of the service on November 14 should help generate stronger revenue growth for the firm, a difficult macroeconomic environment may dampen hopes of a sudden change in profitability for the firm.ĭespite shares potentially being over 30% undervalued, I see significant uncertainty and risks associated with short- to mid-term results which, when combined with a market currently offering many blue-chip stocks at significant discounts, makes building a case for PENN difficult from a deep-value, quantitative perspective. PENN Entertainment ( NASDAQ: PENN) shares have rebounded strongly after the most recent Q3 results which I unfortunately believe to be caused mostly by hype rather than solid operational performance. Michael Blann/DigitalVision via Getty Images Investment Thesis

Penn casino gaming investment thesis