Penn National Gaming Stock Surges By More Than a Third as Bailout Tempts Investors

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Penn National Gaming (PENN) shares have jumped by more than a third over the last two sessions as investors anticipated the $2trn economic stimulus package promoted by US President Donald Trump, which may stabilize the company’s otherwise gloomy outlook.

The Wyomissing-based business, which owns racetracks and casinos, was up 14% at around $15 at lunchtime trading in this session, building on a 19% rise on Tuesday.

penn 1 day performance

The group’s shares accumulated an outstanding 238% return in only five days, trading at nearly four times the stock’s 52-week low with investors appearing to back the business again.

Penn National Gaming operates around 41  gambling venues across the US, featuring more than 50,000 gambling machines, 13,000 tables, and employing nearly 19,000 people to run their huge operation. All of its outlets in the US have been closed for several days, due to the health emergency, with some venues not set to open for 30 days.

The gambling and casino industry worldwide has been battered by quarantine protocols and containment measures implemented by governments to contain the spread of the coronavirus.

In America, the Dow Jones US Gambling Total Stock Market Index recorded an unprecedented 1-month loss of 42.6%, while the index’s year-to-date results are even worse, showing a 51% drop in value based on yesterday’s closing price of 6,733.51.

According to the gaming group’s latest annual report, the company has approximately $1.2bn of debt due in 2020, the most significant of which are business operating leases and financing obligations.

Additionally, as of December 2019, the company had $530m  available in revolving credit lines that it may use to cover some of its operating expenses while their facilities remain close, even though this possibility has led to a recent downgrade in the company’s credit rating by Moody’s based on the company’s “high leverage along with longer-term fundamental challenges”.

In this regard, government-backed loans and other similar credit facilities extended to Penn as part of the White House economic stimulus package could help the company in refinancing its debt for 2020 while its operations get back to normal.

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    Alejandro Arrieche

    Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.

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