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No need to run through the very favorable liquidity situation of Penn National and the very unfavorable leverage position of the rest of the industry. I’ve covered it in my last couple of PENN posts. Here I just wanted to put some math behind my contention that not only does PENN have the liquidity to take advantage of a buyer’s market, management has the track record to do so profitably. The following chart displays the major acquisitions/projects undertaken by the company in its history and the estimated return on investment (ROI). The returns look outstanding.

Investors are usually forced to pay up for management teams that generate these types of returns. With the company trading at around 6x 2009 EV/EBITDA, they won’t have to.




  • PENN has generated a decent to spectacular ROI on every material acquisition/project



  • Despite the recent industry downturn, LTM ROI is equal to or higher than the 1st 12 month (following acquisition) ROI in every instance. I guess PENN can operate casinos too.



  • PENN company EBITDA LTM ROIC of 17.5% exceeds industry by almost 5%