Penn Entertainment Stock Jumps on Regional Casino Strength
Following the largest operator of regional casinos' unexpected first-quarter profit, Penn Entertainment's (NASDAQ: PENN) stock jumped on Thursday.
The gaming stock is up more than 15% during lunchtime trading on activity that has already exceeded the daily average. Following the Ameristar operator's release of its 1Q 2026 financial results, there was a surge in trade.
With $1.4 billion in sales, Penn's land-based casino division reported first-quarter profits before interest, taxes, depreciation, amortization, and restructuring or rent charges (EBITDAR) of $471.4 million.
This resulted in earnings per share of 11 cents, which was significantly higher than the loss of 25 cents in the same time last year and much better than the loss of a penny per share that experts had predicted.
The revenue from Penn's regional casinos in the Midwest, South, and West increased year over year, with the West showing a distinct advantage.
"Trends were encouraging across the portfolio, with strength in our West segment reflecting the continued ramp of M Resort’s (Henderson, Nevada) new hotel tower and strong execution by the team at Ameristar Casino Resort and Spa in Black Hawk, Colo.,” said CEO Jay Snowden in a statement.
The operator's respectable 2026 projection, which included a $12 million increase to the midpoint of the land-based casino EBITDAR range, also helped Penn's shares.
Investors seem content with the operator's acknowledgement that its interactive operation could lose up to $20 million, which is less than the previous estimate of breakeven. The updated outlook for that unit appears to be mostly related to the impending launch of iGaming in Alberta, Canada.
The Return on Penn Investments
Penn has invested large sums of money over the past few years to renovate a number of its regional casinos, including a few in the Midwest.
The Hollywood Casino Joliet, a riverboat casino, will be moved ashore, and $360 million will be spent in Illinois to upgrade Hollywood Casino Aurora. Additionally, Penn will open a $100 million hotel tower in Ohio's Hollywood Casino Columbus in a few weeks.
At a time when destination gaming markets continue to struggle with low attendance, those and other expenditures are paying off for the operator, suggesting Penn is profiting from its position as an operator of venues that its core clients can readily access by automobile.
“While recent underperformance partially factors concerns on the consumer & rising competitor promo spend, we see PENN as comparatively well-positioned given geographic diversification, well-documented operating prowess, and relatively higher quality assets enabling PENN to compete primarily on product,” observes Stifel analyst Jeffrey Stantial. “We also see an attractive pipeline of growth projects in Retail, with proof points of return on Joliet potentially improving sentiment on the broader pipeline.”
With a $22 price target, he gives Penn stock a "buy" rating.
A Little Interactive Development
The stock has been negatively impacted by Penn's numerous online sports betting partnerships in recent years, but now that the difficulties of the unsuccessful ESPN Bet venture are well behind them, the operator is improving thanks to a focus on its higher margin Hollywood Casino iGaming platform.
The company's interactive EBITDA loss for the first quarter was $10.8 million, which was less than the $13.2 million loss that Wall Street had predicted. According to Stantial, Penn's anticipated spending on iGaming in Alberta is consistent with what competitors are predicting.
“We note $20 million is consistent with our DraftKings/FanDuel launch investment estimates, confirming management’s intent to be a market leader consistent with market share in Ontario performance,” adds the Stifel analyst.
