Shares of Penn National Gaming (PENN 5.90%) jumped 11.7% on Friday, furthering their gains since the release of the company's better-than-expected second-quarter results.
Penn suffered heavy losses due to coronavirus-related closures of its casinos. Its revenue fell 77% year over year, to $305.5 million. In turn, the company generated a net loss of $214.4 million, or $1.69 per share, compared to net income of $51.4 million, or $0.44 per share, in the year-ago quarter. However, both figures were better than Wall Street expected. Analysts' estimates had called for revenue of $249.1 million and a per-share loss of $2.06.
Investors are likely looking ahead to a recovery in Penn's core casino business. Nearly all of the company's casinos have reopened and are delivering "very strong financial performance," according to CEO Jay Snowden.
Moreover, Penn is in a stronger position than many of its competitors, thanks in part to its broader geographic footprint and the proximity of its casinos to its customers.
"The outstanding results to date at our reopened properties highlight our unique strategic position as a best-in-class operator of market-leading regional properties, which have rebounded more quickly than casinos in destination markets," Snowden said. "In addition, our geographic diversification across 19 states -- with no more than 15% of our revenues being derived from any single state -- has proven to be a significant benefit as states have reopened casinos on a staggered basis."
Investors might be even more excited about the upcoming launch of Penn's new sports-betting app. "Over the last few months we have made significant progress on the development of the Barstool Sportsbook mobile app and remain on schedule to launch what we believe will be a best-in-class sports-betting product in September," Snowden said.
Combined with the strong growth of its iCasino online gambling platform, investors are likely wagering that Penn's digital products will help to more than offset any ongoing COVID-related challenges to its traditional casino business.