Last Update 24 Dec 25

Fair value Decreased 1.71%

PENN: Interactive Segment Execution Will Drive Future Rebound From Neutral Market Sentiment

Analysts have nudged their blended fair value estimate for PENN Entertainment slightly lower, from approximately $19.44 to $19.11 per share. A more cautious view on the growth and margin contribution of the interactive segment is tempering expectations for the broader portfolio.

Analyst Commentary

Recent Street commentary reinforces the idea that valuation for PENN Entertainment is increasingly driven by execution in the interactive segment, rather than by the stability of its legacy operations. With the blended fair value edging lower, the range of outcomes around digital growth, customer acquisition efficiency, and long term profitability is becoming a central focus for both bullish and bearish analysts.

Bullish analysts acknowledge that the current share price already reflects a degree of skepticism about the interactive business, creating potential upside if management can demonstrate more consistent growth, narrower losses, and clearer visibility into long term margins. Bearish analysts, however, view the new ratings and targets as evidence that the market is still recalibrating expectations downward, particularly for the pace at which the interactive segment can scale to a level that meaningfully offsets slower growth elsewhere in the portfolio.

In this context, the neutral stance and mid teens price targets being introduced into coverage suggest that investors should closely monitor execution milestones, regulatory developments, and competitive intensity in online gaming and sports betting, as these factors are likely to drive the next leg of valuation, either higher or lower.

Bullish Takeaways

Bullish analysts see a neutral rating and mid teens price target as signaling that a meaningful portion of the downside from weaker interactive growth is already reflected in the current valuation.
There is cautious optimism that disciplined cost control and more targeted marketing spend in the interactive segment could gradually improve margins and support multiple expansion over time.
Some investors view the diversified portfolio of land based operations as a stabilizing cash flow base that can help fund digital initiatives without requiring dilutive capital raises.
If management can demonstrate consistent quarter over quarter improvement in interactive engagement and revenue per user, bullish analysts believe the stock could re rate closer to historical valuation ranges.

Bearish Takeaways

Bearish analysts argue that the interactive segment may not deliver sufficient top line growth to offset slower or more mature performance in the rest of the portfolio, limiting earnings power and justifying lower fair value estimates.
Concerns remain that heightened competition in online sports betting and iGaming will keep customer acquisition costs elevated, delaying the path to attractive unit economics and sustainable profitability.
The shift from prior, more optimistic expectations toward a neutral stance is seen by some as confirmation that execution risk in digital remains high, warranting a valuation discount versus faster growing peers.
There is skepticism that management can achieve the scale and brand differentiation needed in interactive to materially change the company wide growth profile over the medium term, capping upside even if near term results improve.

What's in the News

PENN Entertainment has 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 and integrating betting with theScore sports media app (company announcement).
The company has opened a second hotel tower at M Resort Spa Casino Las Vegas, nearly doubling room capacity, expanding event space to more than 100,000 square feet, and adding an estimated 120 new jobs, with additional regional growth projects remaining on schedule (company announcement).
PENN and ESPN have mutually agreed to terminate their exclusive U.S. online sports betting agreement effective December 1, 2025, unwinding the long-term ESPN BET branding arrangement tied to significant annual cash payments and equity warrants (company announcement).
The Board has authorized a new share repurchase program of up to $750 million, valid through December 31, 2028, following completion of prior buyback tranches that retired more than 14% of shares outstanding (company announcement).
Cboe Global plans to launch a regulated prediction markets platform that will initially avoid sports-related products, highlighting a growing adjacent market to traditional sports betting operators such as PENN Entertainment (Bloomberg via periodical).

Valuation Changes

Fair Value Estimate nudged slightly lower from approximately $19.44 to $19.11 per share, reflecting a modest downgrade in long term expectations.
Discount Rate remained unchanged at 12.5%, indicating no shift in the assumed risk profile or cost of capital for PENN Entertainment.
Revenue Growth edged down marginally from about 4.14% to 4.13% annually, signaling a very small reduction in top line growth assumptions.
Net Profit Margin was reduced slightly from roughly 5.89% to 5.80%, suggesting a modestly more conservative view on long term profitability.
Future P/E decreased fractionally from about 6.53x to 6.52x, indicating a minimal adjustment to the forward valuation multiple.

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.

Have other thoughts on PENN Entertainment?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

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