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PENN reports tomorrow. The only cracks we see are the possibility for slightly lower guidance and limited visibility on cash deployment. Street 2010 looks a little high but we’re not yet at that bridge.

Ignoring potential insurance proceeds, we see Q2 EPS and EBITDA close to PENN guidance and our estimate of $0.36 and $147 million, respectively.  The quarter should be a non-event.  For all of 2009, we are projecting $1.47 and $611 million, respectively, both in-line with the Street. 

Where we differ is 2010.  Our estimates of $1.48 and $645 million fall $0.08 and $26 million, respectively, short of the Street.  Numbers could go even lower, however, due to competitive conditions in many of PENN’s markets including Chicagoland, St. Louis, and Indiana (35% of property EBITDA in the aggregate).  Beyond 2010, most of PENN’s properties will face new market entrants.  We estimate over 80% of PENN’s EBITDA is generated in markets with increasing supply.  We’ll cross that bridge when we get to it.

The PENN positives are clear:  great management and a solid balance sheet and cash flow.  The negatives are the lack of growth and dwindling acquisition possibilities.  So what’s the right multiple?  The stock trades at about 7.5x 2010 EV/EBITDA and a 9% FCF yield.  Looks fair to us.