The U.S. regional gaming market isn't nearly as strong as markets like Asia or even Las Vegas, but if you're patient and willing to buy at the right time it can still be a decent investment. No one has been more patient and (in my opinion) made better investments in U.S. gaming than Penn National
After stealing M Resort for $230.5 million in 2010, the company announced yesterday that it has bought a casino in St. Louis from Caesars Entertainment
The deal looks good for Penn, but it's questionable for Caesars Entertainment. The company had $2.0 billion in EBITDA in the last 12 months and has $18.8 billion in net debt. That means the company's debt is worth 9.4 times EBITDA. With this sale, even if it pays down debt with the proceeds, Caesars will increase its leverage and reduce its enterprise value/EBITDA ratio.
An eye on regional markets
Penn isn't the only one with an eye on expanding its regional presence. Wynn Resorts
For the right price these could be profitable deals, but Penn is the one making all the right moves under the radar. M Resort appears to be contributing nicely to a jump in profits at the company, and this St. Louis casino is supposed to be accretive as well. If you can be patient, the odds will move to your favor in gaming. Penn National shows it's just a matter of patience, time, and the right balance sheet to make good bets in this industry.
Regional gaming isn't as sexy as Macau, but it's been a profitable move for Penn National. For more stocks that favor the U.S. over China, check out our report called "The Future Is Made in America." The report is free when you click here.
Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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