Yahoo Finance Is Penn National Gaming Inc (NASDAQ:PENN) Potentially Undervalued?
Penn National Gaming Inc (NASDAQ:PENN), which is in the hospitality business, and is based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $34.97 and falling to the lows of $22.38. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Penn National Gaming’s current trading price of $23.88 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Penn National Gaming’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Penn National Gaming
What is Penn National Gaming worth?
According to my valuation model, Penn National Gaming seems to be fairly priced at around 17% below my intrinsic value, which means if you buy Penn National Gaming today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $28.93, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Penn National Gaming’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Penn National Gaming?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Penn National Gaming, at least in the near future.
What this means for you:
Are you a shareholder? Currently, PENN appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on PENN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on PENN should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Penn National Gaming. You can find everything you need to know about Penn National Gaming in the latest infographic research report. If you are no longer interested in Penn National Gaming, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
