Last Update 10 Dec 25

Fair value Decreased 1.13%

PENN: Digital Expansion Will Gradually Offset Neutral Outlook On Core Casino Portfolio

Analysts have modestly reduced their fair value estimate for PENN Entertainment from approximately $19.67 to about $19.44 per share. This reflects tempered revenue growth expectations for the interactive segment and a view that it may not generate enough upside to offset a more mature core portfolio.

Analyst Commentary

Recent Street research reflects a cautious stance on PENN Entertainment, with coverage initiating at a Neutral rating and a $15 price target. Analysts highlight that the main risk to the investment case is whether the interactive segment can deliver sufficient incremental growth to justify a premium multiple relative to a more mature bricks and mortar portfolio.

Bullish Takeaways

Bullish analysts see potential for the interactive business to gradually improve customer acquisition efficiency, which could enhance margin expansion if marketing spend is brought under tighter discipline.
There is confidence that a more stable core regional casino portfolio provides downside support to valuation, limiting the probability of a sharply lower fair value absent a severe macro slowdown.
Some constructive views center on optionality from product enhancements and partnerships in online wagering, which could unlock higher revenue per user over the medium term.
Longer term, a more balanced mix between digital and land based operations is viewed as a path to smoother earnings growth, which could warrant multiple rerating if execution improves.

Bearish Takeaways

Bearish analysts emphasize that current interactive segment growth expectations may be too optimistic, with customer acquisition costs and competitive intensity limiting operating leverage.
Concerns persist that the interactive unit will not generate enough incremental EBITDA to offset slowing growth in the mature core portfolio, capping upside to the share price.
There is skepticism that management can consistently execute against aggressive product and marketing roadmaps while maintaining disciplined capital allocation, which weighs on valuation multiples.
Given the Neutral stance and $15 price target, some see the risk reward profile as balanced at best, with limited catalysts for a sustained rerating until clearer signs of interactive outperformance emerge.

What's in the News

PENN completed the rebrand of its online sports betting platform to theScore Bet and launched the product in Missouri, extending its OSB footprint to 21 U.S. jurisdictions. On property retail sportsbooks are planned at its three Missouri casinos (Key Developments).
The second hotel tower at M Resort Spa Casino Las Vegas opened ahead of schedule and on budget, nearly doubling room capacity to 765 and expanding total event space to more than 100,000 square feet. A grand opening ceremony is set for December 3 (Key Developments).
PENN and ESPN agreed to terminate their exclusive U.S. online sports betting agreement effective December 1, 2025, unwinding a 10 year deal that tied OSB branding and media rights to ESPN BET (Key Developments).
The Board authorized a share repurchase program of up to $750 million, valid through December 31, 2028, following buybacks that already retired more than 14% of shares outstanding under the prior program (Key Developments).
Cboe Global plans to launch a federally regulated prediction markets platform that will initially avoid sports related products, adding a new exchange backed competitor to event wagering that could indirectly influence the broader sports betting ecosystem in which PENN operates (Bloomberg).

Valuation Changes

The fair value estimate per share has edged down slightly, from approximately $19.67 to about $19.44.
The discount rate is unchanged at 12.5 percent, indicating no shift in the assumed cost of capital.
The revenue growth outlook has been trimmed modestly, from roughly 4.18 percent to about 4.14 percent.
The net profit margin assumption has increased slightly, from around 5.88 percent to approximately 5.89 percent.
The future P/E multiple has declined marginally, from about 6.60x to roughly 6.53x.

Deeper ESPN digital integration and omni-channel strategies are driving user growth, higher engagement, and expanding both digital and retail revenues with improved customer retention.
Investments in tech, property enhancements, and capital returns are reducing costs, growing margins, and strengthening free cash flow for continued long-term profitability.
Structural decline in legacy retail markets, unprofitable digital division, regulatory headwinds, elevated debt, and intense competition threaten long-term profitability and growth prospects.

Catalysts

About PENN Entertainment

Provides integrated entertainment, sports content, and casino gaming experiences.What are the underlying business or industry changes driving this perspective?

Deepening integration with the ESPN digital ecosystem, including new features like FanCenter and account linking with ESPN Fantasy and the direct-to-consumer streaming platform, positions PENN to reach a larger, younger, and highly engaged sports-centric audience. This is likely to accelerate user acquisition, drive double-digit revenue growth, and improve overall market share in both online sports betting (OSB) and iCasino, supporting future top-line growth.
Enhanced omni-channel strategies-such as the successful cross-sell between retail casino properties and digital platforms, demonstrated by substantial year-over-year increases in both retail and online theoretical play-suggest PENN can unlock higher customer lifetime value, increase retention, and boost both revenues and EBITDA margin over time.
Ongoing investments in in-house technology for risk and trading, personalized betting experiences, and product innovation (e.g., in-game and parlay options) have already closed the hold rate gap with market leaders and are likely to further reduce promotional spend and customer acquisition costs, leading to improving digital segment EBITDA and net margins into 2026 and beyond.
The upcoming ramp-up and margin accretion from four new or relocated, efficiency-focused retail projects-along with property-level investments in non-gaming amenities and partnerships (e.g., hotel and golf entertainment)-will combine to offset headwinds from new supply, drive higher per-guest spend, and support long-term EBITDA expansion and margin improvement.
Share buybacks at undervalued prices, combined with ongoing deleveraging (including repurchase of convertibles) and reduced cash tax outflows due to favorable legislative changes, increase earnings per share and improve free cash flow, positioning PENN to return more capital to shareholders and invest into high-ROI projects.

PENN Entertainment Earnings and Revenue Growth

PENN Entertainment Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming PENN Entertainment's revenue will grow by 6.0% annually over the next 3 years.
Analysts assume that profit margins will increase from -1.1% today to 5.9% in 3 years time.
Analysts expect earnings to reach $471.4 million (and earnings per share of $3.51) by about September 2028, up from $-75.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $519.4 million in earnings, and the most bearish expecting $198.7 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 7.7x on those 2028 earnings, up from -36.4x today. This future PE is lower than the current PE for the US Hospitality industry at 24.0x.
Analysts expect the number of shares outstanding to decline by 6.1% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

PENN Entertainment Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's retail casino segment is facing ongoing headwinds from new supply in certain geographic markets-particularly in legacy markets like Bossier City, Louisiana-which has been in structural decline for two decades and is now undergoing significant cannibalization from incremental competition; this could result in long-term pressure on revenues and net margins from PENN's physical casino properties.
PENN's Interactive (digital gaming and sports betting) business is currently loss-making (with projected 2025 EBITDA losses of up to $200 million) and is heavily reliant on achieving ambitious growth, market share gains, and operational improvements by 2026-if these targets are missed due to competitive pressure or slower online adoption, it could materially affect future earnings and free cash flow.
The company is absorbing successive tax increases in major gaming states (Illinois, New Jersey, Louisiana, Maryland) and faces risk from further regulatory tightening and compliance costs, which can erode net margins and make digital betting less profitable.
PENN's aggressive capital investments in new retail projects and digital initiatives (e.g., property relocations, ESPN BET integration) are resulting in high leverage and significant ongoing capital expenditures; this elevated debt/load and dependency on project execution heightens vulnerability to rising interest rates, refinancing risk, or economic downturns, potentially reducing financial flexibility and increasing earnings volatility.
While PENN is focusing on leveraging the ESPN BET partnership and omnichannel integrations, it faces intense competition from larger tech-native operators (e.g., DraftKings, FanDuel); if PENN is unable to close the product and market share gap-especially as consumer trends shift further toward online/mobile and away from traditional casinos-long-term revenue growth and valuation multiples may remain under pressure.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $22.0 for PENN Entertainment based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $17.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.0 billion, earnings will come to $471.4 million, and it would be trading on a PE ratio of 7.7x, assuming you use a discount rate of 12.3%.
Given the current share price of $19.61, the analyst price target of $22.0 is 10.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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