Why This Gambling Stock Is Up 17% This Week
One of the leading gambling and online sportsbook stocks soared this week, and here’s why.
Pen Entertainment (NASDAQ:PENN) shares have been on a steady upward trajectory this week, rising about 17% since Wednesday and surging more than 8% on Friday to trade around $20 a share.
As the NFL season officially began last weekend, Penn, which owns the ESPN Bet online sportsbook and operates a variety of casinos and online games, was on the upswing, but there was another specific catalyst that rocked the stock.
Stock price rises due to insider buying
Several corporate executives have been buying Penn Entertainment stock in the past few weeks. According to an SEC filing, CEO Jay Snowden bought 54,300 shares of Penn stock on September 3rd at $18.44 per share. That was an additional $999,448 in addition to the shares he already owned, bringing his total holding to 853,000 shares.
Then on September 6, Penn Director Anuj Dhanda bought 15,000 shares of the company at $18.40 per share, worth $276,000. Dhanda now owns 31,523 shares.
Finally, according to a September 12 SEC filing, Penn director David Handler purchased 10,000 shares of Penn stock on September 10 at a price of $17.51, valued at about $175,000, bringing his total Penn Entertainment holdings to 293,450 shares.
So what does this mean? Typically, when insiders (leadership and management) buy their own stock, they see good value and are bullish on the company’s prospects.
It may coincide with the start of the NFL schedule, the most betting season of the year, and executives may be hoping for a boost in revenue as a result. Or there may be an investment, partnership, or acquisition that they believe will boost the stock price.
In the most recent quarter, Penn State’s revenue was roughly flat year over year at $1.66 billion, but the company reported a net loss of $27 million.
But in August, the company launched ESPN Bet in New York, a huge sports betting market, which brought an immediate boost to sales.
“We recently began rolling out enhancements to our ESPN BET product and will be rolling out the remaining major upgrades ahead of the start of college football and launch in New York,” Snowden said in the company’s second-quarter earnings report. “At the same time, ESPN’s partners are expanding their unique ESPN BET media integrations, including ESPN’s leading fantasy football product, which boasts more than 12 million active users.”
Should I buy pen stock?
The average price target for Penn Entertainment stock among 21 Wall Street analysts is $21.50, with most rating it a Sell.
On the other hand, investors should always be cautious when executives buy company stock.
The company is one step closer to becoming profitable again, and its entry into the New York sports betting market should help boost its earnings. But on the other hand, despite its ESPN connection, it has struggled to stand out in a competitive market.
The company has not been profitable for the past few quarters, but its low price-to-sales ratio suggests it is undervalued. The stock itself is down 24% YTD.
There are no stocks that are screaming buy right now, but they seem to be moving in the right direction. And the recent insider buying is certainly something that should be of interest to investors.
I will be keeping an eye on this stock.
