Gaming facilities and technology company Penn Entertainment(NASDAQ: PENN) had a forgettable week on the stock exchange. According to data compiled by S&P Global Market Intelligence, the company's shares tumbled by more than 20% in value over the period. The main reason was abundantly clear.
A pair of fourth-quarter monster misses
The No. 1 culprit was Penn Entertainment's fourth-quarter earnings, which were published before market open on Thursday. These revealed that the company's revenue fell by 12% year over year to just under $1.4 billion. More uncomfortably, it flipped to a bottom-line loss of almost $359 million compared to a profit of just under $21 million in the year-ago period.
On a non-GAAP (adjusted) basis, that net loss amounted to $1.75 per share, far steeper than the $0.50 average estimate from analysts tracking the stock. Penn Entertainment also missed on revenue, as those prognosticators were collectively expecting it to earn $1.55 billion.
Much of the shortfall derived from the company's ESPN Bet, an online sportsbook leveraging Walt Disney's well-known sports channel's brand name. This has a lot of potential, thanks to the spread of legalized gambling throughout the U.S., but it isn't a money maker yet. Against revenues just short of $32 million for the quarter, ESPN Bet posted an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of nearly $334 million.
No apparent change in strategy coming
Penn Entertainment did not proffer guidance for either its current (first) quarter or full-year 2024. It did indicate it would continue to pursue its strategy of pushing what it terms "solid property level performance" in its physical gaming facilities and investing in its digital gambling assets.
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Eric Volkman has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends the following options: long January 2025 $25 calls on Penn Entertainment and short January 2025 $30 calls on Penn Entertainment. The Motley Fool has a disclosure policy.
