But let’s be realistic. No one should own PENN for near term earnings results. One owns PENN because it is well managed and very cheap, even on new numbers, as investors lump it in with the overleveraged gaming operators. Unlike PENN, the competition lacks the liquidity to actually take advantage of increasingly attractive acquisition opportunities. At only 2.5x leverage, PENN and its ROI focused management team has the powder to lever up while most of the other guys are scrambling to de-lever. That means the competition is cutting costs and services and not investing for the long term. The line between the haves and the have-nots is clearly drawn and PENN is on the right side of that trend.
As I write this PENN is trading off 15% and down 41% from its recent high just one month ago. To me this is a gift. While there isn’t a definitive near term catalyst, it is not often one gets to buy into a very well managed company as strategically and financially well positioned as PENN for 6x EBITDA.