Is Penn National a buy after a major run?

Its time to talk about one of the most hyped stocks in the market once again. Here is the breakdown on $PENN otherwise known as Penn National Gaming.

Current Price: $70.20

52/Wk High: $76.62

52/Wk Low: $3.75

Read below for the breakdown!

Penn National Gaming has been an epic name to follow throughout the COVID-19 pandemic. After hitting a low of $3.75 in March to recently hitting a $76.62 high this month, it begs the question, is $PENN still a buy.

For all the newbies, Penn National is a major owner and manager in the gaming, racing, and video gaming operations space. Not only that but with their recent acquisition of Barstool sports for $450 million, the company is quickly growing in the media space as well.

Most recently the stock’s most recent push came from Barstool’s new app, called Barstool Sports Book, which is a sports betting app.

Not only that but recent upgrades, notably from Stifel, noted that the stock could possibly surge to a new high price target of $85/share due to the “Portnoy Momentum Trade” and Barstools future growth (forbes.com).

Digging into the numbers, earnings have taken a pounding though and the most recent quarter represented that.

In the most recent Q2 earnings report $PENN beat the low expectations, with a reported EPS of $-1.69 versus the EPS consensus of $-2.11. It is important to note though that this is a major improvement from the Q1 EPS of $-5.26.

On the downside, Q2 revenues were dismal, and the company reported a $305.5 million revenue, representing a drop of 76.9% YOY.

Not only were earnings terrible, but the companies balance sheet isn’t much better. When last reported Penn Nationals debt sat at $7.459 billion. Secondly, $PENN’s total cash on hand was last reported at a solid $1.244 billion as of June 30th.

While the numbers are not great the analysts are mostly on the bearish side of things. Currently, the mean price target sits at $59.42/share, representing a -15.21% downside.

The high price target sits at $85.00/share, representing a 21.29% upside, and the low price target is $22.00/share, representing a -68.61% loss.

The big money on the otherhand is bullish and in a big way. Currently, 88.49% of $PENN is owned by institutions. Top holders include Fidelity Management & Research, BlackRock Institutional Trust, and Baron Capital Management.

Finally, digging into the technicals $PENN has run like crazy over the past couple of weeks. Currently, the six-month RSI sits at 68.88, which is just under the technically “overbought” zone of 70.

Furthermore, the six-month MACD sits between 6.01 and 5.19 and continues to maintain strong upward momentum, in which the six-month CCI sits at a high 113.04.

Penn National stock currently sits just 6.42 points off its highs and trades at a price to sales ratio of 2.36.

Overall at Penn Nationals' current levels, I would not be opening a new position or closing one out.

While the stock is up and could run much more, shares are simply too expensive for me at these levels, and a pullback to the most recent support of around $60 seems to be a solid buying target.

In short, wait for a pullback, versus playing the short term risk at extremely high levels.

EAT - SLEEP - PROFIT

Disclaimer: This is not direct financial advice, simply opinion based on independent research.