PENN Stock Gains 49% in Six Months: Should You Buy, Sell or Hold?

Shares of PENN Entertainment, Inc. PENN have climbed 48.6% in the past six months, outperforming the Zacks Consumer Discretionary sector’s drop of 2.1% and the Zacks Gaming industry’s decline of 8%.

Much of this outperformance can be attributed to improving confidence in PENN’s operating trajectory. Record retail revenues, broad-based customer demand, better cost control and early contributions from recently completed development projects have strengthened the company’s operating performance. The significant narrowing of Interactive losses and faster-than-expected deleveraging have likely supported investor sentiment.

PENN Six-Month Price Performance

Image Source: Zacks Investment Research

Following the rally, investors face a more nuanced decision: whether improving fundamentals provide room for further upside or whether the recent appreciation warrants caution. Let’s examine the company’s core growth drivers and emerging risks to determine the appropriate course of action.

What’s Working in PENN’s Favor?

Retail Strength Supports PENN’s Growth

PENN’s Retail segment generated record quarterly revenues of $1.5 billion in the second quarter of 2026, up approximately 4% year over year. Adjusted EBITDAR increased about 6% to $517.2 million, while the margin expanded to 34.4%. Same-store revenues and adjusted EBITDAR rose approximately 2% and 4%, respectively, indicating that the improvement was not solely dependent on new projects.

The performance was broad-based, with nine properties setting second-quarter records for both revenues and adjusted EBITDAR. Rated revenues benefited from mid- and high-worth customers, while unrated revenues increased for the fifth time in seven quarters. The positive momentum continued into July.

PENN raised the midpoint of its 2026 retail revenue guidance to $5.87 billion and adjusted EBITDAR guidance to $1.963 billion. The revised guidance implies mid-single-digit adjusted EBITDAR growth and approximately 50 basis points of margin expansion in the second half.

New Properties Broaden PENN’s Customer Reach

PENN’s recently completed development projects are delivering encouraging early results. Hollywood Casino Joliet continued to perform strongly as it approached the first anniversary of its opening, while M Resort generated record quarterly net revenues and adjusted EBITDAR following the opening of its new hotel tower. The Hollywood Casino Columbus hotel tower also gained traction, with outer-market guests accounting for 85% of hotel cash revenues during its first six weeks of operation.

Hollywood Casino Aurora has shown particularly strong initial momentum. Admissions, slot volumes, table volumes and non-gaming revenues approximately doubled from year-ago levels following the opening. About 20% of guests were new to the property, while another 25% were reactivated customers. Rated guests staying at the hotel generated 21% higher average daily worth, demonstrating the property’s ability to attract higher-value play.

The development pipeline offers further growth potential. Hollywood Casino Council Bluffs, expected to open in 2028, will replace an older riverboat casino with a modern land-based facility connected to PENN’s existing 444-room hotel. The company is also evaluating additional hotel and riverboat-to-land-based conversion projects, with investments expected to be staggered to maintain capital-allocation flexibility.

Interactive Business Moves Closer to Profitability

PENN’s Interactive segment generated second-quarter revenues of $349.4 million, including a $185.5 million skin-tax gross-up. More importantly, its adjusted EBITDA loss narrowed to $9.5 million from $62 million in the prior-year quarter, representing an improvement of $52.5 million.

The standalone Hollywood Casino app generated record quarterly revenues, while Ontario benefited from stronger online sports-betting activity and cross-selling into iCasino. World Cup engagement was also notable: approximately 70% of sportsbook users wagered on the event, and 45% of those customers placed a soccer bet for the first time.

PENN expects the segment to generate positive adjusted EBITDA in the fourth quarter, driven primarily by iCasino growth, Canadian operations and disciplined spending on higher-value sportsbook customers.

What Could Hurt PENN Going Forward?

PENN’s Interactive business remains exposed to volatility in online sports-betting outcomes. Customer-friendly results during the NBA Finals and World Cup reduced second-quarter performance by approximately $3 million. Lower wagering volumes also contributed to PENN reducing its 2026 Interactive revenue forecast to $1.57 billion from $1.6 billion.

Competitive intensity could create additional pressure during the football season. PENN expects aggressive promotional spending from established sportsbook operators and prediction-market platforms. Although the company is prioritizing higher-value customers, a more promotional environment could restrict customer acquisition and sportsbook growth.

The Alberta expansion will weigh on near-term profitability. PENN expects to invest approximately $20 million in the market during 2026 and anticipates the Interactive segment’s largest quarterly loss in the third quarter. Achieving market share comparable with Ontario will likely depend on customer acquisition, retention and cross-selling in a more competitive market.

PENN also faces substantial capital commitments. The company expects $1 billion of cash payments under triple-net leases, $150 million of net cash interest expense and $400 million of capital expenditures in 2026. With $400 million of notes maturing in January 2027 and additional development projects under consideration, maintaining cash-flow growth and reducing leverage remain important priorities.

PENN’s Bottom Line Declines

The Zacks Consensus estimate for PENN’s 2026 earnings per share has declined 10.5% in the past 60 days.

PENN Earnings Estimate Trend

Image Source: Zacks Investment Research

Over the past 60 days, earnings estimates for Accel Entertainment, Inc. ACEL and Boyd Gaming Corporation BYD have declined 1.4% and 0.4%, respectively.

PENN Trades at a Discount

PENN is trading at a discount to the broader industry, with a forward 12-month price-to-earnings (P/E) multiple of 12.58, below the industry average of 22.58. Industry peers such as Accel Entertainment and Boyd Gaming carry P/E ratios of 15.06 and 10.64, respectively.

PENN’s P/E Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

How to Play PENN Stock?

While PENN’s recent rally reflects improving confidence in its retail operations and progress toward Interactive profitability, the broader investment case remains balanced rather than decisively bullish. Record retail revenues, margin expansion, strong early results from recently completed projects and sharply lower Interactive losses support the company’s improving fundamental profile. At the same time, the reduced Interactive revenue guidance, intense sportsbook competition, Alberta-related spending and substantial capital commitments may keep earnings and cash-flow visibility uneven in the near term.

Although PENN trades at a discount to the industry on a forward P/E basis, the stock’s 48.6% appreciation suggests that part of the operating improvement may already be reflected in the valuation. Declining earnings estimates and uncertainty surrounding sustainable Interactive profitability warrant a selective approach. Existing shareholders may consider holding their positions, while prospective investors may prefer to wait for a more favorable entry point.

PENN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research