PENN Entertainment, Inc. (PENN): what the price requires
The current priced-in claim for PENN Entertainment, Inc. (PENN) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PENN
Headline
| Field | Value |
|---|---|
| Ticker | PENN |
| Company | PENN Entertainment, Inc. |
| Current price | $20.42/sh |
| Composition | Gaming 77% / Food and beverage 6% / Hotel 4% / Other 13% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.5% |
| Operating margin (mid-cycle) | 12.5% |
| Margin compression implied | -10.0pp |
| Trailing margin (depressed year) | -8.1% |
| Multiple paid | 13x mid-cycle operating income |
The operating-margin requirement is derived from the framework's value band at year 7, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.6% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~2.2%/yr; the models below use their own rates.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.43σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.65x | 3 | expensive |
| Earnings | 13.80x | 1 | expensive |
| Relative | 0.83x | 2 | justifies |
| Growth | — | 0 | — |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 3.5%); the inversion above states its own rate.
Per-Model Detail (n=6)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| DCF Exit Multiple | Growth | $47.60 | 0.43x | no | Exit EV/EBITDA: 11.4x / 13.4x / 15.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $132.45 | 0.15x | yes | P/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $13.76 | 1.48x | yes | Reference only (book value floor): BV/sh $13.76, ROE negative |
| Two-Stage Excess Return | Asset | $12.38 | 1.65x | yes | Reference only (book value with convergence): BV/sh $13.76, ROE converges to ke |
| Discounted Future Market Cap | Growth | $16.24 | 1.26x | no | Rev $7.1B, growth 6% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.4x / 0.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $14.47 | 1.41x | no | Normalized EBIT (5y avg op income, one-time charges added back) $0.36B × (1−21%) / WACC 3.5% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $13.60 | 1.50x | yes | EBITDA $0.67B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $1.48 | 13.80x | yes | FCF $588.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $0.01 | 2042.00x | yes | SBC-adj FCF $0.53B (FCF $0.59B − SBC $0.06B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $3.75 | 5.45x | yes | BV $13.76 × (ROIC 1.0% / WACC 3.5%) |
| P/Sales Sector | Relative | $132.45 | 0.15x | no | Revenue $7.07B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $4.3b |
| Net debt / NOPAT (after-tax) | 6.28x |
| Net debt / operating income (pre-tax) | 4.96x |
| Interest coverage | 1.9x |
| Share count CAGR (buyback) | -7.7% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 12.5%); the trailing year was depressed.
Bullet Takeaways
- Penn Entertainment is a regional casino operator with a digital arm bolted on, gaming about 77% of the mix, that spent the last two years and a write-down learning that branded online sports betting is brutally hard to scale.
- The defining number is the loss: the company reported a net loss of about $491 million for 2025 per its 10-K, and the digital pivot away from the ESPN brand toward online casino is the bet on whether that loss reverses.
- Watch the interactive segment's path to breakeven, where the digital adjusted EBITDA loss narrowed to about $10.8 million in Q1 2026 from roughly $89 million a year earlier, and the $750 million buyback the company authorized for 2026 through 2028.
Bull Case
Start with the bear's strongest point, because the bull case only works if you confront it. Penn poured marketing and capital into ESPN Bet for two years, never won meaningful market share, terminated the deal, took an $825 million write-down, and rebranded the sportsbook as theScore Bet effective December 1, 2025. That is a real and expensive failure, and the income statement carries the scars: a 2025 net loss the 10-K reports as "$ ( 491.4 )" million. Any honest bull starts there.
The pivot is where it gets interesting. Freed from the ESPN economics, Penn is refocusing digital on online casino, where the unit economics are far better than sports betting, and the early results suggest the bleeding has largely stopped. The interactive segment's adjusted EBITDA loss narrowed to about $10.8 million in Q1 2026 from roughly $89 million in the prior-year quarter, and online casino revenue hit a quarterly record near $70.9 million, up about 15% year over year. A digital business that was losing nearly $90 million a quarter and is now within sight of breakeven changes the entire arithmetic, because the regional casino business underneath it has always generated cash. The 10-K shows the scale of the third-party online sports betting and iCasino market-access fees the company has been paying, about $588.3 million in 2025 against $435.6 million the prior year, and those are exactly the costs a leaner, casino-led digital strategy can rationalize.
The capital story reinforces the turn. Penn has been buying back stock aggressively, with the share count down sharply over the past year, and it authorized a $750 million buyback covering 2026 through 2028. The activist HG Vora won board seats and pushed exactly the strategy now in motion, refocusing on online casino and Canada at the expense of US sports betting. The bull case is straightforward: the retail casino base produces durable cash flow, the digital arm has stopped being a money pit, and management is returning capital while the market still prices the company for the failed sports-betting era.
Bear Case
The balance sheet is the structure that makes Penn fragile, and it is larger than the reported debt suggests. Net debt sits around $4.3 billion, but that understates the true fixed-cost burden, because Penn does not own most of the real estate its casinos sit on. It rents it under long-term triple-net master leases, and those leases carry contractual escalators: the 10-K describes rent "subject to an annual escalator of up to 1.0% each June 1, depending on a minimum coverage floor ratio of Net Revenue to Rent." Rent that rises every year regardless of how the casinos perform is a fixed claim on cash flow that ranks ahead of equity holders, and it does not move down in a recession. Interest coverage of roughly two times leaves limited cushion if regional gaming revenue softens.
The operating picture is still a loss, and the turnaround is not yet proven. The company is not generating positive operating income on a trailing basis, the return on equity is negative, and the price already credits a recovery that has only just begun to appear in the digital segment. At today's price the asset-based and earnings-power methods both read expensive: the stock trades above its book value of about $13.76 per share, and capitalizing the current cash flow at the cost of capital lands far below the price. Only the peer-multiple lens, valuing the business on its enterprise-to-EBITDA multiple against the gaming sector, reaches the price. That means the market is paying for an EBITDA recovery to hold and compound, not for demonstrated GAAP profitability, which the company does not currently have.
The competitive reality is the deeper bear point. Penn tried to buy its way into online sports betting twice, first with Barstool and then with ESPN, and both ended in write-downs. The new theScore Bet and online-casino strategy faces entrenched, better-capitalized digital competitors with national scale, and the pivot to iCasino runs into a patchwork of state-by-state legalization that limits the addressable market. The retail casino business, meanwhile, is mature and regionally concentrated, exposed to consumer discretionary spending that weakens precisely when leverage hurts most. The bull case rests on the digital losses staying gone and the buyback compounding per-share value; the bear case is that a levered, lease-burdened regional operator with two failed digital chapters behind it has thin margin for the third to disappoint.
Valuation
The price is betting on a turnaround that has barely started to show in the financials: that the digital segment, which lost money for years, holds near breakeven and that the regional casino base keeps generating the cash flow that services a heavy fixed-cost structure. Because the company is not currently profitable on a trailing basis, the standard earnings-based methods have little to anchor on, and the valuation rests on enterprise cash flow and asset value rather than on net income.
The methods split cleanly. The peer-multiple lens, valuing the business at a gaming-sector enterprise-to-EBITDA multiple on roughly $0.67 billion of EBITDA, lands near the current price, which is why the characterization reads as relative-multiple-justified. The asset-based methods, anchored on book value near $13.76 per share, sit below the price, signaling the stock trades at a premium to its accounting net worth despite the losses. The earnings-power lens is the starkest: capitalizing free cash flow at the cost of capital produces a value a fraction of the price, because the company is being valued on a recovery, not on its trailing earnings. The absence of any forward-growth method reaching the price is the tell. This is a bet that EBITDA recovers and the digital drag stays gone, priced through the multiple rather than through demonstrated profit.
Solvency is the load-bearing risk. Net debt of about $4.3 billion sits on top of long-term triple-net lease obligations with annual escalators, and interest coverage of roughly two times is thin. The one clear positive in the capital structure is the share count, which has fallen sharply, roughly 8% over the trailing window, direct evidence of the buyback deploying capital where it cannot be faked, with a further $750 million authorized through 2028. What the buyer is underwriting is a leveraged, lease-encumbered operator whose digital losses have only recently narrowed: the downside is bounded not by net cash, of which there is none, but by the casino real estate footprint and the EBITDA the retail business reliably produces, against fixed claims that rise every year whether business is good or not.
Catalysts
Penn's Q1 2026 print was the clearest evidence yet that the digital reset is working. Total revenue came in around $1.779 billion with consolidated adjusted EBITDA of about $265.8 million, up from roughly $173.3 million a year earlier, and the net loss narrowed to about $2.8 million. The interactive segment is the swing factor: its adjusted EBITDA loss shrank to roughly $10.8 million from about $89 million in the prior-year quarter, with online casino revenue at a record near $70.9 million, up about 15% year over year. The next quarterly print is the read on whether digital reaches breakeven and whether iCasino momentum holds ahead of regulated launches in newer markets.
The strategic catalysts are largely behind the company now and shaping what comes next. The ESPN Bet agreement was terminated effective December 1, 2025, with an $825 million write-down, and the sportsbook rebranded as theScore Bet. The activist HG Vora dispute was settled with three new board seats, and the company aligned with HG Vora's demand by authorizing a $750 million buyback for 2026 through 2028 and refocusing digital on online casino and Canada over US sports betting. Watch the pace of iCasino expansion into newly regulated markets and the buyback execution against the share count; those are the two levers that turn a stabilized digital business into per-share value.
Peer Cohorts (Per Segment, With Filing Citations)
Interactive (reported)
- DKNG (DRAFTKINGS INC.)
- (no filing in the citation store)
- RSI (Rush Street Interactive, Inc.)
- (no filing in the citation store)
- FLUT (FLUT)
- (no filing in the citation store)
- CHDN (Churchill Downs Inc)
- (no filing in the citation store)
Core business (reported)
- MGM (MGM Resorts International)
- (no filing in the citation store)
- CZR (CAESARS ENTERTAINMENT, INC.)
- (no filing in the citation store)
- BYD (BOYD GAMING CORP)
- (no filing in the citation store)
- RRR (RED ROCK RESORTS, INC.)
- (no filing in the citation store)
- LVS (LAS VEGAS SANDS CORP)
- (no filing in the citation store)
- WYNN (WYNN RESORTS LTD)
- (no filing in the citation store)
- MLCO (MELCO RESORTS & ENTERTAINMENT LIMITED)
- (no filing in the citation store)
- MAR (MARRIOTT INTERNATIONAL INC /MD/)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
PENN Q1 2026 earnings release and company announcement, 2026 · PENN company announcement, November 2025 · PENN Q1 2026 earnings release · PENN company announcement, 2026 · PENN board settlement disclosure, 2026