Last Update 18 Feb 26

Fair value Decreased 0.90%

PENN: Interactive Execution And Buybacks Will Support Upside As Expectations Reset

Analysts have adjusted their fair value estimate for PENN Entertainment slightly lower to about $18.44 per share, reflecting trimmed Street price targets alongside updated assumptions for the discount rate, revenue growth, profit margin, and future P/E.

Analyst Commentary

Recent Street research on PENN Entertainment has centered on adjusted price targets and caution around the company’s online and interactive operations, which directly feeds into how analysts think about fair value, execution risk, and growth potential.

Bullish Takeaways

Some bullish analysts still see PENN as reasonably aligned with its current prospects at around the mid teens per share, with the $15 initiation level cited as a reference point for where risk and reward can balance out.
The initiation at a Neutral rating suggests PENN is not viewed as fundamentally broken by all parts of the Street, which can support a case that current valuation already reflects many of the key concerns.
Bullish analysts may view the trimmed price targets as a recalibration that reduces the risk of overly optimistic expectations being priced into the stock.

Bearish Takeaways

Bearish analysts have lowered price targets for PENN by amounts such as $5, $3, and $2, signaling reduced conviction in upside and a tighter ceiling on what they see as fair value in the near term.
A key concern highlighted is that PENN’s interactive segment may not generate enough growth to offset the rest of the portfolio, which weighs on growth assumptions and can cap what analysts are willing to pay on a P/E basis.
The series of target cuts indicates increasing focus on execution risk, particularly around delivering consistent profitability from newer initiatives compared with the more mature parts of the business.
With price targets converging in a relatively narrow band around the mid teens, bearish analysts see limited valuation support for a more optimistic case until there is clearer evidence that the interactive segment can materially change the growth profile.

What's in the News

Nevada regulators referenced a Massachusetts ruling that barred prediction market operator Kalshi from offering sports event contracts, signaling ongoing regulatory attention on sports related wagering products that sit near traditional sports betting markets (GI / Bookies)
A Massachusetts judge allowed the state to prevent Kalshi from listing sports event related contracts, underscoring how some regulators are drawing firm lines between sports betting and event contract trading (Bookies)
Speculation about Penumbra appeared in a Betaville blog post, adding to broader trading chatter in parts of the gaming and betting ecosystem, although it is not directly tied to PENN Entertainment’s operations (Betaville)
The Colorado Limited Gaming Control Commission added a condition to the license of PENN subsidiary Ameristar Casino Black Hawk that restricts investors from exerting control or influence over PENN or Ameristar without prior suitability approval, and PENN’s board amended the company bylaws to reflect these requirements
PENN completed the rebrand of its online sports betting app to theScore Bet, launched the product in Missouri, and kept its Hollywood Casino online casino offering accessible within the app in several states, while planning on property retail sportsbooks at its three Missouri casinos
The second hotel tower at M Resort Spa Casino Las Vegas officially opened, nearly doubling room capacity to 765 and expanding total conference and event space to more than 100,000 square feet, with PENN indicating the project was completed on budget and ahead of time and estimating about 120 new jobs tied to the expansion

Valuation Changes

Fair Value: Adjusted slightly lower from $18.61 to about $18.44 per share, reflecting small tweaks to core inputs rather than a major reset.
Discount Rate: Moved modestly from 12.50% to 12.33%, indicating a slightly lower required return baked into the model.
Revenue Growth: Assumption is broadly stable, shifting from about 4.15% to roughly 4.16%, a very small change in the long term outlook used in the model.
Net Profit Margin: Ticked up from about 5.74% to roughly 5.85%, implying a slightly higher profitability assumption over time.
Future P/E: Trimmed from about 6.41x to roughly 6.20x, which pulls back the multiple applied to PENN’s projected earnings in the outer years of the model.

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.

ESPN Integration And Omni-Channel Investments Will Shape Market Evolution

PENN: Interactive Execution And Buybacks Will Support Upside As Expectations Reset

Analyst Commentary

What's in the News

Valuation Changes

Key Takeaways

Catalysts

Assumptions

Risks

Valuation

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How well do narratives help inform your perspective?

Disclaimer

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