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Penn National Revokes 2020 Outlook due to Coronavirus Scare

The devastating impact of the novel coronavirus outbreak (COVID-19) on the global economy has compelled Penn National Gaming, Inc. PENN to withdraw its previously announced 2020 guidance.

With the coronavirus pandemic showing no signs of abatement, most companies across the world are undertaking measures to tackle the situation. The companies are not only stalling productions but are also focusing on cost-cutting actions. Despite best efforts by policymakers, it is becoming more difficult for companies to survive amid such trying times.

To mitigate the financial impact of the COVID-19 pandemic, the company initiated certain actions to reduce its operating expenses. Notably, the CEO and the board of directors have agreed to a pay cut effective from Apr 1, 2020. Moreover, the board has decided to furlough part of its corporate workforce, beginning from the aforementioned date.

President and chief executive officer of Penn National, Jay Snowden, stated, “With all of our 41 properties in 19 states temporarily shuttered, like many others in the gaming and hospitality sector, we are making difficult decisions to help preserve our liquidity and ensure a brighter future for our Company’s team members, customers, shareholders and other key stakeholders.”

Moreover, to protect its business from this crisis, Penn National entered into an agreement with Gaming and Leisure Properties, Inc. GLPI to divest its Tropicana Las Vegas property as well as a land in Morgantown, Pennsylvania. The transaction was valued at $337.5 million in rent credits. However, subject to negotiations, the deal is expected to consummate by Apr 30, 2020. Pursuant to the agreement, Penn National also has an option of acquiring GLPI’s Hollywood Casino in Perryville, Maryland in the future..

Although, this deadly severe acute respiratory syndrome has claimed too many lives so far, the company shows enough resilience to fight the current calamity and emerge unscathed to welcome back its team members and guests when it is legal and safe. So far this year, shares of the company have plunged 53.9% compared with the industry’s decline of 44.6%.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the Consumer Discretionary sector include Gaia, Inc. GAIA, Camping World Holdings, Inc. CWH and Super League Gaming, Inc. SLGG. Gaia and Camping World Holdings sport a Zacks Rank #1, while Super League Gaming carries a Zacks Rank #2 (Buy).

Gaia has a three-five year expected earnings per share growth rate of 15%.

Camping World Holdings and Super League Gaming’s 2020 earnings are expected to surge 221.2 % and 14.1%, respectively.

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