Casino, sports betting and entertainment operator PENN Entertainment (NASDAQ:PENN) fell short of the markets revenue expectations in Q3 CY2025 as sales rose 4.8% year on year to $1.72 billion. Its non-GAAP loss of $0.22 per share was significantly below analysts’ consensus estimates.
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Revenue: $1.72 billion vs analyst estimates of $1.73 billion (4.8% year-on-year growth, 0.6% miss)
Adjusted EPS: -$0.22 vs analyst estimates of -$0.03 (significant miss)
Adjusted EBITDA: $194.9 million vs analyst estimates of $385.2 million (11.3% margin, 49.4% miss)
Operating Margin: -45.2%, down from 4.1% in the same quarter last year
ADVERTISEMENTFree Cash Flow Margin: 10.1%, up from 2.6% in the same quarter last year
Market Capitalization: $2.30 billion
As stated in the joint release issued this morning by PENN and ESPN, Jay Snowden, Chief Executive Officer and President, said: “When we first announced our partnership with ESPN, both sides made it clear that we expected to compete for a podium position in the space. Although we made significant progress in improving our product offering and building a cohesive ecosystem with ESPN, we have mutually and amicably agreed to wind down our collaboration.
Established in 1982, PENN Entertainment (NASDAQ:PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, PENN Entertainment grew its sales at a 11.9% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. PENN Entertainment’s recent performance shows its demand has slowed as its annualized revenue growth of 2% over the last two years was below its five-year trend. Note that COVID hurt PENN Entertainment’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.
PENN Entertainment also breaks out the revenue for its most important segment, Northeast Region. Over the last two years, PENN Entertainment’s Northeast Region revenue (casinos, hotels) averaged 1.6% year-on-year growth.
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