Penn Entertainment stock falls after missing earnings estimates

Yahoo Finance Live anchors discuss Penn Entertainment earnings and what it says about sports betting adoption.

Video Transcript

JOSH SCHAFER: As in my stock today, my play is also down. Penn Entertainment, shares falling a little over 6% with the gambling operator reporting earnings that missed Wall Street estimates prior to the opening bell today. Now Penn posted earnings per share of 13% versus a Street estimate of $0.42. That marks the fifth time in the last eight quarters that Penn's earnings per share has surprised the Street to the downside.

But still a few bright spots to point out here. Penn still plans to close out its purchase of Barstool Sports on February 17. Penn says adding-- and adding that Barstool posted record revenue in 2022. CEO Jay Snowden saying in today's release that Penn and its other digital arm, the Score, will, quote, "provide us with compelling competitive advantages in organic cross-selling opportunities." So Penn clearly still relying on Dave Portnoy and Barstool Sports to drive that digital sportsbook strategy that we talk about.

Dave, one other graph I want to pull up here, though, because we've talked a lot about, is gambling recession proof? So what you're looking at is a graph from 2007 to 2012. And it's regional markets, regional casinos, versus Las Vegas casinos. You see Las Vegas casinos really fell off and didn't recover quite as quick the last time we had a deep recession. But regional markets did. Penn pointed this out today in their earnings because Penn is a very heavy regional operator. And I think that'll be cur--

DAVE BRIGGS: Eh.

JOSH SCHAFER: We're talking about a different time, obviously.

DAVE BRIGGS: Thank you.

JOSH SCHAFER: A different time.

DAVE BRIGGS: We were in a time dramatically different time in terms of sports gaming and gambling.

JOSH SCHAFER: Right, no, but that's in person.

DAVE BRIGGS: Sports has apples and bananas.

JOSH SCHAFER: That's brick and mortar, though.

DAVE BRIGGS: Yeah.

JOSH SCHAFER: I just think it's interesting to see Vegas fall off to that deep extent, and will that travel fall off again this year when we think about 2023 and the overall casino element.

DAVE BRIGGS: Reminiscent of when the Foxwoods CEO came on here and said gambling is not recession proof. He is fearful, but look, the sports gambling stocks have had a terrific start to the year, a lot like the tech sector. DraftKings up more than 50% year to date.