- Penn Entertainment stock has soared about 17% higher in recent days.
- The catalyst has been a spate of buying by company executives and managers.
- Is Penn Entertainment stock a buy?
One of the leading gambling and online sportsbook stocks has been soaring this week. Here’s why.
PENN Entertainment (NASDAQ:PENN) stock has been on the move this week, rising some 17% since Wednesday, including a more than 8% jump Friday to about $20 per share.
While the official start of the NFL season last weekend may have provided a lift for Penn, which owns the ESPN Bet online sportsbook and runs various casinos and online gaming properties, there was another specific catalyst that jolted the stock.
Insider Buying Lifts Stock Price
Over the past couple of weeks, several company executives have been loading up on Penn Entertainment stock. On September 3, according to an SEC filing, CEO Jay Snowden bought 54,300 shares of Penn stock at $18.44 per share. That’s a $999,448 stake, in addition to the shares he already owns, bringing his total to 853K shares.
Then, on September 6, Penn Director Anuj Dhanda acquired 15,000 company shares for $18.40 per share, which is a $276,000 stake. Dhanda now owns 31,523 shares.
Finally, an SEC filing on September 12 showed that Penn Director David Handler bought 10,000 shares of Penn stock at a share price of $17.51 on September 10. That comes out to about a $175,000 stake and brings his total number of shares in Penn Entertainment to 293,450.
So, what does this mean? Typically, when insiders — leadership and management — buy stock in their own firm, they see good value and are bullish on its prospects.
It may coincide with the start of the NFL schedule, the heaviest betting season of the year, and the executives may be expecting a revenue boost as a result. Or perhaps there is an investment, partnership, or acquisition on the horizon that they believe could boost the stock price.
In the most recent quarter, Penn revenue was essentially flat year-over-year at $1.66 billion, but the company reported a $27 million net loss.
However, in August, the company launched ESPN Bet in the state of New York, a huge market for sports betting, so that could provide an immediate revenue boost.
“We recently began the rollout of our ESPN BET product enhancements and will launch the remaining key upgrades prior to the start of college football and our launch in New York,” Snowden said in the Q2 earnings report. “In parallel, our partners at ESPN are expanding our unique ESPN BET media integrations, including those with ESPN’s leading fantasy football product which boasts over 12 million active users.”
Should You Buy Penn Stock?
Penn Entertainment stock has a median price target of $21.50 among the 21 Wall Street analysts that cover it, with most rating it as a sell.
On the other hand, investors should always take notice when executives are buying company stock.
The company has been moving closer to becoming profitable again, and its entry into the New York sporting betting market should provide a revenue boost. But, on the other hand, it has struggled to distinguish itself, even with the ESPN connection, in a crowded and competitive marketplace.
While the company has not been profitable over the past few quarters, it has a low price-to-sales ratio, indicating it is undervalued. The stock itself is down 24% YTD.
There is nothing about the stock that screams buy right now, although it does seem to be moving in the right direction. Also, the recent insider buying is certainly something that should pique an investor’s interest.
This is a stock I’d put in the watch column.