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Key financials for Pinnacle Entertainment

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Revenue growth

In 2012, Pinnacle Entertainment (PNK) delivered negative net revenue growth of 12.1%. However, the company’s revenue has increased by 48.4% in 2014 year-to-date. This change was brought about by the creation of revenue synergies after PNK’s acquisition of Ameristar Casinos in August 2013.

Pinnacle Entertainment CEO Anthony Sanfilippo commented, “We are on track to complete 2014 as a seamless and fully integrated organization, and there is early evidence that the revenue synergy initiatives we have implemented are beginning to materialize at our Ameristar-branded properties.”

Wall Street analysts expect PNK’s revenues to stabilize in 2015.

Earnings growth

Pinnacle Entertainment expects its EBITDA (earnings before interest, tax, depreciation, and amortization) to grow by 119.1% in 2014 and by 1.9% in 2016 while maintaining the margin of ~27%. Peer company Penn National Gaming (PENN) anticipates EBITDA growth of 9% in 2015. However, Boyd Gaming (BYD) is likely to report a negative EBITDA growth rate of ~7% next year.

ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and VanEck Vectors Gaming (BJK) enable investors to hold diversified portfolios in leisure companies.

It should be noted that the net profit in the chart above has been adjusted for exceptional items. As of December 4, 2014, Wall Street analysts were expecting PNK’s adjusted net profit for 2015E to be about $92 million with a growth rate of 34.9%. Considering this adjusted net profit growth and almost flat revenue growth in 2015, PNK anticipates that its adjusted net profit margin will increase by 110 basis points.

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