I don't know whether to be impressed with or mystified by
investors of
Penn National Gaming (Nasdaq: PENN).
On Wednesday, the operator of casinos and racetracks
issued some unwelcome news: Third-quarter profit, as well as
the company's guidance, fell below the Wall Street consensus.
Full-year earnings and revenue will be less than what the
company had predicted in July.
Yet, shares were up by more than 5% in mid-day trading
Wednesday.
Although some casino operators
are delayingor
suspendingtheir ambitions during the recession, Penn
National, strapped with cash due to renegotiated terms with
lenders and the issuance of new debt, is forging ahead in
several U.S. time zones.
To longtime investors, these plans have been discussed
periodically this year. To new or prospective investors,
Wednesday's recitation reveals an optimistically aggressive
company.
Grand plans
Investors beware: Many of Penn National's plans rely on
voters or legislators. However, in a best-case scenario, Penn
National could significantly add to the 16 properties that it
owns or operates.
Here's a brief look:
racetrack casinosand/or stand-alone slot-machine
facilities.
Penn National recently became half-owner of a
joint venturewith
International Speedway (Nasdaq: ISCA),
bidding to build a casino next to a motor-sports track in
Kansas City. State regulators will hopefully decide by
year-end.
The company supports a proposed state constitution
amendment in Ohio that would permit full-service casino
gambling in four large cities. A vote is set for Nov. 3.
The company is also awaiting resolution of a
political-legal dispute over whether racetracks can allow
slot machines. Penn National owns a Toledo track and says
that they have their "eye on other racetracks in the
state."
Penn National is one of several bidders seeking a
contract to build a slot machine facility next to the
AqueductRace Track in New York City. Among the many
competitors for this piece of prime real estate include
Wynn Resorts (Nasdaq: WYNN) and
Harrah's Entertainment.
Penn National is exploring the prospects of acquiring
the
bankrupt, partially completed Fontainebleau,putting it
in the Las Vegas neighborhood of such heavyweights as Wynn,
Las Vegas Sands (NYSE: LVS), and
MGM Mirage (NYSE: MGM). The company said
Wednesday that it has talked to a prospective partner and
has made an initial proposal to Fontainebleau
creditors.
Yesterday and tomorrow
Despite the ambitious long-term goals, investors can't
ignore the immediate past or the immediate future.
For the third quarter, Penn National's earnings per share
of $0.33, excluding special items, fell $0.02 below the Wall
Street consensus. Revenue of $620.4 million missed the
company's forecast of $651.4 million. Continued... |