Penn National Gaming Inc
US consumer sentiment hits 11-year high, good for casinos
The US consumer sentiment index was 98.1 in January, up from 93.6 in December. This is an 11-year high, the highest on a final basis since January 2004.
Disposable income increases, drives demand for leisure
Real disposable income increased 3.7% year-over-year. This boosts consumer buying power and means consumer spending in leisure activities may increase.
Why Sandell wants a spin-off of Brookdale’s real estate assets
Sandell has proposed a spin-off of Brookdale’s real estate assets into an REIT. It’s a tax-free spin-off that avoids double taxation on income distribution.
Why Casinos Rely On Disposable Income
On a year-over-year basis, real disposable income increased 2.9%. More disposable income boosts consumer buying power.
A Quick Guide To The Bifurcation Of Caesars’s Operating Leases
The initial term of each lease will be for 15 years with four five-year renewals. CZR will guarantee payments and performance of the OpCo’s obligations.
Casino REITs Are Becoming Popular In The US
US casino operators are considering REIT spin-offs to achieve higher valuations. Real estate is a main income source. REITs distribute at least 90% of their taxable earnings to shareholders.
Institutional investors dominate at Pinnacle Entertainment
Pinnacle Entertainment (PNK) has approximately 59.2 million outstanding shares, with free float of 57 million shares. Institutional investors hold around 122% of the float.
Shorting Pinnacle’s stock could be difficult to cover
The short-interest ratio for Pinnacle Entertainment (PNK) dropped from 13 days as of October 31, 2014, to five days as of November 14, 2014.
Why Pinnacle’s leverage ratio could be a concern for investors
Pinnacle Entertainment (PNK) has a massive debt-to-equity ratio of 15.4. This indicates that PNK is very aggressive in financing its operations with debt.
Liquidity analysis for Pinnacle Entertainment
The current ratio for Pinnacle Entertainment (PNK) had declined severely to 0.7 as of September 30, 2014, from 2.9 as of December 31, 2012.
Key financials for Pinnacle Entertainment
Wall Street analysts expect Pinnacle Entertainment’s adjusted net profit for 2015E to be about $92 million with a growth rate of 34.9%.
How Pinnacle Entertainment earns its gaming revenues
Revenues for Pinnacle Entertainment (PNK) are mostly cash-based. Customers wager with cash or pay for non-gaming services with cash or credit cards.
Profitability analysis of Pinnacle Entertainment
Pinnacle Entertainment’s compounded annual growth rate of adjusted property EBITDA over a three-year period ending on December 31, 2013, stood at 20.2%.
Pinnacle Entertainment’s cost structure
Pinnacle Entertainment (PNK) incurs direct costs in gaming, food and beverage, lodging, retail, entertainment, and other areas.
Revenue breakdown for Pinnacle Entertainment
Pinnacle Entertainment’s gaming revenues represented 89% of total revenues generated by the company for the trailing twelve months ending September 30, 2014.
What is Pinnacle Entertainment’s forward valuation?
As of November 28, 2014, Pinnacle Entertainment’s one year forward EV/EBITDA stood at 9.2x compared to its peer group average of 7.6x.
Pinnacle Entertainment pays debt from efficient cash flow
During 3Q14, Pinnacle Entertainment (PNK) repaid ~$116 million of total debt from its cash flow from operations. It accomplished this with the help of efficient cash flow and working capital management as well as reductions in its growth capital commitments.
Caesars plans to restructure its largest operating unit as a REIT
REITs generate income by collecting rent and pay out at least 90% of taxable income in the form of dividends to shareholders. By converting CEOC into a REIT, the beneficial holders of CEOC’s senior secured credit facilities would receive a 100% recovery in cash and debt.
Why Caesars Entertainment’s stock jumped over 45% in two days
The market reaction may have been caused by what CZR’s share price could be based on its standalone capacity, after it becomes detached from its highly leveraged unit, CEOC. Offloading the unit could serve as a boon to CZR’s profits after interest expenses, and possibly boost its earnings per share.
Must-know: Wall Street Analysts’ outlook for Penn National Gaming
PENN reported $0.10 earnings per share for the quarter, beating the consensus estimate of $0.06 by $0.04. The company reported net revenues of $646 million for Q3 2014, while the consensus estimate was $634 million.
Why Penn National Gaming is an attractive investment
A company can generate more earnings if a lot of debt is used to finance additional operations, even if it results in high debt-to-equity. If earnings are that much greater than the interest cost of the debt, shareholders win.
Why Penn National Gaming’s liquidity is strong
Liquidity ratios determine a company’s ability to meet its short-term obligations. The liquidity position of a company can be measured by using two main liquidity ratios—current ratio and quick ratio.
Must-know: Institutional investors dominate Penn National Gaming
If management shows confidence in the business by owning shares, it’s a signal to other investors that they should have confidence. Meanwhile, insider holding won’t prevent a company from being hurt by weak market performance and poor fundamentals.
Key management executives at Penn National Gaming
The management of a publicly traded company is responsible for creating shareholder value. Strong management is the backbone of any successful company.
Must-know: Penn National Gaming’s performance metrics
Performance metric Penn National Gaming, Inc. (PENN) defines adjusted EBITDA as earnings before interest, taxes, stock compensation, debt-extinguishment charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, gain or loss on disposal of assets, and other income or expenses. Adjusted EBITDAR is adjusted EBITDA excluding rent expenses such as those associated with PENN’s […]
Why Penn National Gaming shares jumped on news of spin-off
Tax-free spin-off On November 15, 2012, Penn National Gaming, Inc. (PENN) announced plans to separate its operating assets and real property assets into two publicly traded companies. Its approach? A tax-free spin-off of real estate assets into a real estate investment trust ( or REIT) called Gaming and Leisure Properties Inc. (GLPI). On November 1, 2013, PENN […]
Penn National Gaming’s must-know revenue by segment
PENN derives more than half of its revenue from the East/Midwest segment, while it derives 34% and 9% of its revenues from the Southern Plains and West segments, respectively.
An overview of Penn National Gaming’s diverse holdings
PENN’s operated facilities feature ~31,000 gaming machines, 760 table games, and 3,100 hotel rooms. PENN owns and operates gaming and racing facilities with a focus on slot machines.
Must-know: The most popular casino games
Casinos’ popularity is growing. This suggests that people like to gamble occasionally. Unfortunately, they don’t always win. For most of the people, the real fun is playing the game—not necessarily winning.
Why Atlantic City bet big on casinos and lost
Some blame it on outdated regulations. Some blame it on increased competition from neighboring states. Some blame it on poor or complacent management. But they all agree on one thing: Atlantic City’s casino market is crumbling.
Magnetar Financial invests in REIT Gaming and Leisure Properties
Magnetar Financial LLC opened a brand new position in Gaming and Leisure Properties (GLPI) that accounts for 0.75% of the fund’s 4Q portfolio.
Omega Advisors opens a position in Gaming and Leisure Properties
Gaming and Leisure Properties (GLPI) is a new position initiated by Omega Advisors last quarter. Gaming and Leisure Properties is the first gaming-focused REIT, which was spun off from Penn National Gaming (PENN).