PENN Entertainment (PENN): Valuation in Focus After Early M Resort Tower Opening and Expansion Moves

PENN Entertainment (PENN) just surprised everyone with news that its $206 million second hotel tower at M Resort will open in December, beating its original timeline by several months. Add in a new partnership with celebrity chef Emeril Lagasse to bring his Meril restaurant on site, and it is clear PENN is firing on all cylinders when it comes to growth and strategy. For investors, moves like these do more than just expand the property; they send a strong message about the company's execution and ambition, which can quickly catch the market’s eye.

This expansion is not happening in a vacuum. Over the past year, PENN’s stock has gained 16% even as longer-term returns remain negative, hinting at renewed momentum on the back of tangible business developments. The M Resort announcement comes right after new hotel and casino openings in Joliet and plans for Aurora, Illinois and Columbus, Ohio, signaling a deliberate push into physical assets. In the past month, shares are up 21%, pointing to a shift in how investors view PENN’s growth plans and risk profile.

After this acceleration in both news flow and stock price, the real question is whether PENN is now undervalued given its improving fundamentals, or if recent gains already reflect all the upside markets expect to see.

Most Popular Narrative: 7% Undervalued

The most widely followed narrative sees PENN Entertainment as undervalued, projecting notable upside compared to its fair value estimate.

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.

Want to know how bold digital moves could send PENN’s value surging? The most popular narrative relies on a handful of powerful growth assumptions and an industry-low profit multiple. Curious about which financial forecasts could flip the odds on PENN’s valuation? Explore the calculation behind this eye-catching price target and see which core metrics drive it.

Result: Fair Value of $22 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, structural decline in legacy casino markets and heavy investment in digital, combined with tough competition, could challenge PENN’s path to long-term profitable growth.

Find out about the key risks to this PENN Entertainment narrative.

Another View: DCF Model Weighs In

Switching gears, our SWS DCF model also evaluates PENN. It looks well undervalued using this method and this echoes the view from the multiples-based approach. However, could any hidden variables cause a rethink?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PENN Entertainment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own PENN Entertainment Narrative

If you want a fresh perspective or think there is more to PENN’s story, you can quickly build your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding PENN Entertainment.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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