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Why Penn National Gaming Is Up 9% Today

By James Brumley – Aug 5, 2021 at 4:04PM

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The casino name is juicing its rebound from the pandemic-prompted slowdown by expanding its sports-oriented offering.

What happened

Shares of casino operator Penn National Gaming (PENN -1.93%) are higher by 8.9% late Thursday following the company's second-quarter earnings beat and an announcement that the company intends to acquire Score Media and Gaming (SCR). The deal will deepen Penn's reach into the sports and sports-betting markets.

So what

For the three-month stretch ending in June, Penn National Gaming earned $1.17 per share on revenue of $1.55 billion. Both figures were up compared to pandemic-crimped results produced in the second quarter of last year, but more important, those results topped analyst expectations of $1.45 billion worth of sales and profits of $0.90 per share. It also appears the company will be able to continue its recovery from the pandemic-prompted lull.

A hand drawing a rising red arrow.

Image source: Getty Images.

At least some of that growth will be spurred by the $2 billion acquisition of Score Media and Gaming, which is the name behind sports app theScore. The app offers users access to sports-related media and information as well sports-based betting where it's legal to do so.

Now what

The potential of the acquisition is significant. Penn National Gaming is already a stakeholder in Barstool Sports, and has leveraged the brand name within (and outside of) its resorts to appeal to consumers who may not be interested in a traditional casino experience. At the same time, with technology market research outfit Technavio estimating that the sports betting market itself will grow at an annual clip of 10% through 2024 -- and be $134 billion bigger than it was in 2020 as a result -- Penn's positioning is a smart move.

Sure, Thursday's 9% pop makes stepping in now a daunting proposition. Given the stock's subpar performance since peaking in March, though, there's still lots of room to recover a big piece of that 50% pullback. Today's jolt may well be a sign that the pivot out of this multi-month sell-off is finally taking shape.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Penn National Gaming Stock Quote
Penn National Gaming
$34.98 (-1.93%) $0.69
Score Media and Gaming Inc. Stock Quote
Score Media and Gaming Inc.

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