Investment Thesis
Penn Entertainment exhibits severe financial distress despite modest 5.8% revenue growth, marked by catastrophically low interest coverage of 0.2x that signals critical debt servicing risk. The company's net loss of -$2.3M, negative free cash flow of -$85.4M, and current ratio of 0.82x reveal structural profitability and liquidity deterioration that threaten long-term viability.
Strengths
- Positive operating cash flow of $122.4M demonstrates core business operations generate cash
- Revenue growth of 5.8% YoY indicates continued market demand for gaming and hospitality properties
- Operating income of $97.1M shows ability to produce profits at operating level
Risks
- Interest coverage of 0.2x is critically low—operating income covers interest expense only one-fifth of requirements
- Negative free cash flow of -$85.4M with capex of $207.8M indicates capital structure unsustainable without cash burn
- Current ratio of 0.82x below 1.0x signals liquidity stress and potential working capital deficit
- Company unprofitable with net loss of -$2.3M and negative net margin of -0.1% despite revenue growth
Key Metrics to Watch
- Interest coverage ratio—must improve above 1.5x to demonstrate debt sustainability
- Free cash flow—critical inflection point if turns positive to support debt reduction
- Current ratio and liquidity position—refinancing or asset sales risk if deteriorates further
- Debt maturity schedule and refinancing capability in tightening rates environment
Financial Metrics
Revenue
1.8B
Net Income
-2.3M
EPS (Diluted)
$-0.02
Free Cash Flow
-85.4M
Total Assets
14.1B
Cash
708.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
5.5%
Net Margin
-0.1%
ROE
-0.1%
ROA
0.0%
FCF Margin
-4.8%
Balance Sheet & Liquidity
Current Ratio
0.82x
Quick Ratio
0.81x
Debt/Equity
1.61x
Debt/Assets
87.1%
Interest Coverage
0.20x
Long-term Debt
2.9B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T11:54:00.972348 |
Data as of: 2026-03-31 |
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