Penn National Gaming first quarter profit beats Wall Street

The news sent the casino operator's stock up us$ 1.86, or 6.7 %, to us$ 29.59 in morning trading. Over the past year, shares have traded in a range of us$ 11.82 to us$ 47.08. Penn earned us$ 40.7 million for the period ended March 31, basically the same results as a year ago. But per share results declined to 38 cents from 46 cents due to fewer shares outstanding in the prior-year period.

Analysts predicted profit of 33 cents per share, according to a Thomson Reuters survey. Analysts' estimates normally exclude one-time items. Chairman and Chief Executive Peter M. Carlino credited Penn's performance to its diverse gaming operations and the resiliency of the markets its properties reside in.
Regional casino operators like Penn have managed to perform better during the recession than those in large gaming markets such as Las Vegas and Atlantic City, because more gamblers are opting to stay at venues closer to home. Penn has casinos and racing facilities in states such as Florida, Indiana, Louisiana, New Mexico, Ohio and West Virginia.

JPMorgan's Joseph Greff was pleased with the company's quarterly performance. "These were solid results in light of extremely tough industry fundamentals, and we believe this reflects the health of Penn's markets, its strong competitive positioning in these regional, drive-to markets and the ability to extract margin improvement even on flat year-over-year revenue performance," he wrote in a client note.

Greff reiterated an "Overweight" rating and us$ 31 price target. Revenue dipped to us$ 612.2 million, from us$ 613.5 million but still topped Wall Street's estimate of us$ 608.2 million. Increased promotional activity took a small bite out of results, as did slightly lower gaming revenue.

Penn raised its 2009 profit outlook to us$ 1.38 per share from us$ 1.29 per share, but lowered its revenue forecast to us$ 2.48 billion from us$ 2.53 billion. It provided a second-quarter earnings forecast of 35 cents per share on revenue of us$ 595.6 million.
Analysts expect 2009 net income of us$ 1.33 per share on revenue of us$ 2.47 billion. Second-quarter profit is expected to come in at 34 cents per share on revenue of us$ 611.2 million.