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PNK reports on Thursday morning. Every gaming company that has released calendar Q3 earnings has experienced a positive move in its stock. However, those stocks didn’t double the week heading into earnings.

Since we posted “A SHORT SQUEEZE COMETH” last week, PNK is up 114%. After such a big move, how much more upside can there be? Considering that the stock is still down 75% year to date, even after the recent surge, I’d say quite a bit.

PNK is a victim, self inflicted to an extent, of a major consumer pull back, a leveraged balance sheet, and the (investor) perception of tight liquidity. However, while not predicting blow out operating results, I believe the performance and outlook will be much better than bad. PNK’s market exposure is more advantageous than most casino companies. Texas and markets less exposed to the housing bubble generate most of PNK's customers. October commentary should be positive, on the margin, relative to September.

Regarding liquidity, management should be able to allay those fears on the conference call. There are no covenant issues until possibly Q2 but the company has a lot of levers to pull to maintain the appropriate leverage including, cessation of construction in St. Louis, cost cutting, and a temporary cut in maintenance (slot) capex. PNK could stop construction on St. Louis and be able to pay off its entire credit facility before it matures in 2010. They have a significant amount of flexibility and, as such, we moved them to the right side of the liquidity trade last week.

The following table highlights some key forward looking comments issued by management on the Q2 conference call. Unlike most of the commentary from the other casino operators, I actually think PNK management will reiterate their Q2 assertions. Maybe not Reno but who cares?

Management may affirm all or most of these assertions issued during Q2 conference call