What happened
Shares of regional gaming giant Penn National Gaming, Inc (PENN 1.60%) jumped as much as 17.9% in trading Thursday after the company reported first-quarter 2018 earnings. As of 1:25 p.m. EDT, the stock was up 12.2%.
So what
First-quarter revenue grew 5.1% to $816.1 million and adjusted EBITDA after paying for its leases increased 10.2% to $126.7 million. Revenue fell slightly short of the $817.3 million guidance given in February, but adjusted EBITDA easily topped the $117.9 million management was expecting.
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The quarter also included the approval of the acquisition of Pinnacle Entertainment, which it agreed to acquire for $2.8 billion late in 2017. When the deal is completed, management expects about $100 million in operational synergies, so we could see improved margins and growth in years ahead as well.
Now what
Penn National continues to be an industry-leading operator in gaming and has demonstrated the ability to grow consistently in tough regional gaming markets. The Pinnacle Entertainment acquisition could fuel even more growth as the geographic diversity of the business improves and Penn National tries to keep gamblers in its network of resorts. I think this is still a great long-term stock and the first quarter showed once again that management is among the best in the gaming industry.
