PENN · PENN Entertainment
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $16.45
Note written ·
How this view changed
- · Rating raised from Low to Medium. Results, 5 November 2026: PENN's Q3 2026 report on 5 November 2026 showed adjusted EPS of $0.32 against a $0.17 estimate, an interactive adjusted EBITDA loss of $18.3M versus $76.6M a year earlier, and a retained Q4 interactive profit target.
Price against the kill line
6.4% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $16.45, on record since 11 November 2026. The shares are down 6.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $16.45, the 18 September 2026 close that sat under the post-report rally, would end the recovery case. So would the Q4 2026 interactive profit target slipping into 2027 or the reaffirmed full-year interactive guide widening.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,840
- Revenue, change on a year (%)
- +7.1
- Operating margin (%)
- 6.9
- Net cash, cash less debt ($M)
- −1,762
- Enterprise value to sales (×)
- 0.6
- Enterprise value to operating income (×)
- 12.1
All filed numbers
What PENN Entertainment reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 1,840 | +7.1 | 6.9 |
| first filed | 1,857 | +5.2 | 7.1 |
| first filed | 1,779 | +6.4 | 5.5 |
| first filed | 1,806 | +8.2 | −1.0 |
| first filed | 1,717 | +4.8 | −45.2 |
| first filed | 1,765 | +6.1 | 4.4 |
| Pre-tax income ($M) | 34.3 |
| Net income ($M) four quarters: −9.1 | 33.0 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −5.6 |
| Operating cash flow ($M) | 734 |
| Capital spending ($M) | Not reported |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 1,045 |
| Debt ($M) long-term debt | 2,807 |
| Net cash, cash less debt ($M) | −1,762 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 240 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,905 |
| Market value ($M) | 2,349 |
| Enterprise value, market value plus net debt ($M) | 4,111 |
| Enterprise value to sales (×) | 0.6 |
| Enterprise value to operating income (×) | 12.1 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.2 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 13.1% of shares outstanding sold short, 5.4 days of average trading to cover, +4.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $507K | $0 |
The thesis
PENN Entertainment's digital turnaround passed its main test: the Q3 2026 report on 5 November 2026 narrowed the interactive loss and kept the Q4 interactive profit target. The shares closed at $18.45 on 10 November 2026, 16.4% below the 52-week high of $22.06. The Q4 2026 report, expected in early 2027, settles whether the guided interactive profit is delivered.
The narrative is accelerating again: Wells Fargo raised its target to $23 on 6 November 2026 and Citigroup raised its to $19 on 9 November 2026, the first target increases after the cuts of 12 October to 20 October 2026. The adjusted close was $14.72 on 28 October 2026.
Q3 interactive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was a $18.3 million loss, against $76.6 million a year earlier (8-K, 5 November 2026). On the Q3 call, PENN guided Q4 interactive adjusted EBITDA to a profit of $18.7 million, per Deadspin's report of the call. Adjusted earnings per share were $0.32 against a $0.17 estimate (Benzinga, 5 November 2026).
The 14-day relative strength index (RSI) closed at 78.6 on 10 November 2026, a reading that marks fast buying after the report. It was 39.3 on 28 October 2026.
Bullish and bearish views on PENN Entertainment, Inc.
The bull case on PENN Entertainment, Inc. (PENN), in brief: digital losses keep narrowing. The bear case: revenue missed slightly.
Bull case
- Digital losses keep narrowing. The Q3 2026 interactive adjusted EBITDA loss of $18.3 million compares with $76.6 million in Q3 2025 and a $9.5 million loss in Q2 2026. Q3 carried the Alberta launch, the guided peak-loss quarter (8-K, 5 November 2026).
- Management guides to a Q4 profit. PENN guided Q4 interactive revenue of $445 million and adjusted EBITDA of $18.7 million, and said 2027 will be profitable for the year (Deadspin, 5 November 2026). Coverage of the call says interactive was already profitable in October.
- Earnings and balance sheet improved. Q3 net income was $32.6 million against a $865.1 million loss a year earlier. Lease-adjusted net leverage fell to 5.6x at 30 September 2026 from 6.8x at 31 December 2025, and liquidity was $2.0 billion (8-K, 5 November 2026).
- Retail margins keep improving. Q3 retail adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) was $501.8 million at a 33.7% margin, the third straight year-over-year margin gain (8-K, 5 November 2026).
- Analyst targets sit well above the price. Benzinga listed an average target of $23.80 on 6 November 2026, with 13 of 18 analysts at Buy and a range of $17 to $30.
Bear case
- Revenue missed slightly. Q3 revenue of $1.840 billion fell short of the $1.843 billion estimate (Benzinga, 5 November 2026). The earnings beat came from profit, not sales.
- Retail margin slipped from Q2. Q3 retail adjusted EBITDAR was $501.8 million at 33.7%, against $517.2 million at 34.4% in Q2 2026 (8-Ks, 5 November 2026 and 6 August 2026).
- Leverage remains high. Lease-adjusted net leverage of 5.6x at 30 September 2026 counts master-lease rent as debt. The Council Bluffs casino adds a $180 million to $200 million project with a 2028 opening (PENN announcement, 10 September 2026).
- Sector headlines still drive the shares. New York sued Polymarket on 24 September 2026 over alleged illegal gambling. PENN runs no prediction-market product, yet the shares traded with the group from August.
- Management turnover. An executive, Mike Nieves, will leave to become chief financial officer of Summit Hotel Properties (company news, 29 October 2026).
Price setup
The adjusted close on 10 November 2026 was $18.45 against a 52-week high of $22.06. Earlier closes mark the path: $14.72 on 28 October 2026, $15.21 on 15 October 2026, $16.45 on 18 September 2026 and $18.79 on 14 August 2026. The close sits just below the August level, and the three-month change is −2.1%.
Benzinga listed the shares at $17.43 on 6 November 2026. The next closes above $18.79 and then toward the $22.06 high would show the sell-off fully retraced. A daily close below $16.45 would give back most of the post-report move.
Crowding evidence is mixed. The RSI of 78.6 shows heavy recent buying, and company news on 2 November 2026 named PENN among the leaders in sports-betting stocks. The earnings date has passed, and no insider sales or share issuance appear in the company news.
The consensus target of $23.80 (Benzinga) and Wells Fargo's $23 sit above the close. Citigroup's $19 and Morgan Stanley's $18 (20 October 2026) sit near it.
Catalysts ahead
- No fixed date: Court rulings and state actions on prediction markets. The sector traded on these headlines from August; adverse rulings for those platforms ease the competitive concern, favorable ones extend it.
- ~10 December 2026 (est.): Monthly state gaming revenue reports for November (Illinois Gaming Board published October's on 10 November 2026). Gives a read on iCasino and retail trends in a quarter where management said interactive was already profitable in October.
- ~February 2027 (est.): Q4 2026 earnings report. Settles whether the guided $18.7M Q4 interactive adjusted EBITDA profit was delivered; falls outside the next 30 days.
What would change the view
A daily close below $16.45, the 18 September 2026 close that sat under the post-report rally, would end the recovery case. So would the Q4 2026 interactive profit target slipping into 2027 or the reaffirmed full-year interactive guide widening.
The risks this note tracks, each with what would confirm it:
- Interactive profit fails to arrive in Q4 2026 as guided. Confirmed by: the Q4 report shows an interactive adjusted EBITDA loss, or management moves the profit target into 2027.
- Retail earnings soften while digital is still building. Confirmed by: retail adjusted EBITDAR margin falls below the 33.7% reported for Q3 2026, or the raised full-year retail outlook is cut.
- The post-report rally reverses on overbought trading. Confirmed by: a daily close below $16.45, the 18 September 2026 close, with no change to company guidance.
- Prediction-market headlines pull the sector lower regardless of PENN's results. Confirmed by: a favorable court ruling or state action for prediction-market platforms, followed by lower sports-betting shares.
What it trades with
PENN traded with sports-betting and online-gaming shares on prediction-market headlines from August, and company news on 2 November 2026 listed it among the sector's leaders. It is a regional-casino and online-gaming operator, so state revenue reports and consumer-spending data also affect it.
Its master-lease structure ties part of its earnings to REIT landlords, and lease-adjusted leverage of 5.6x makes the shares sensitive to credit conditions. HG Vora's 4.7% stake and three board seats add an activist-driven capital-allocation angle.
The evidence, claim by claim (8)
- Q3 2026 consolidated revenue was $1,840.0M (Q3 2025: $1,717.3M); net income was $32.6M versus a $865.1M loss a year earlier; adjusted EPS was $0.32; consolidated adjusted EBITDA was $284.0M versus $194.9M. PENN Q3 2026 earnings release (8-K) · as of
- Q3 2026 interactive adjusted EBITDA loss was $18.3M versus $76.6M in Q3 2025; interactive revenue was $348.4M including a $191.4M skin-tax gross-up. PENN Q3 2026 earnings release (8-K) · as of
- Q3 2026 retail adjusted EBITDAR was $501.8M at a 33.7% margin, the third straight year-over-year margin improvement. PENN Q3 2026 earnings release (8-K) · as of
- Lease-adjusted net leverage was 5.6x at 30 September 2026 (6.8x at 31 December 2025); traditional net leverage 2.3x; liquidity $2.0B including $1.0B cash. PENN Q3 2026 earnings release (8-K) · as of
- On the Q3 call PENN guided Q4 2026 interactive revenue of $445M (including a $242M tax gross-up) and interactive adjusted EBITDA of $18.7M, a profit, and said 2027 will be profitable for the year. Deadspin coverage of the Q3 2026 call · as of
- Adjusted EPS of $0.32 beat the $0.17 estimate; revenue of $1.840B missed the $1.843B estimate. Benzinga headline · as of
- Wells Fargo kept Equal-Weight and raised its target to $23 (from $22); Citigroup kept Neutral and raised its target to $19 (from $17). Company news headlines, Wells Fargo and Citigroup · as of
- PENN's adjusted close was $18.45 on 10 November 2026, 16.4% below its 52-week high of $22.06; the 14-day RSI was 78.6 and the three-month change was −2.1%. Split/dividend-adjusted daily bars · as of
Sources
- PENN Entertainment, Inc. - Form 8-K - FY2026 · sec.gov
- PENN Targets Interactive Profit in 2027 as Q3 Loss Narrows · deadspin.com
- PENN Entertainment Improves Revenue, Adjusted EBITDA in Q3 · covers.com
- Digital Profitability Coming For Penn: 'Take That To The Bank' · legalsportsreport.com
- Benzinga