Penn National Shares Improve in 3rd Quarter
by Blood-Horse Staff
Date Posted: 10/26/2004 6:17:07 PM

Penn National Gaming Inc. posted a jump of seven cents per share for the third quarter Oct. 26, in part due to higher revenues from its Charles Town Races operation.

The aggressive casino/track operator reported that net income rose to $17.2 million or 41 cents per share, up from $13.6 million and 34 cents a share a year ago.

Its third-quarter report and the outlook for the final quarter were reduced by the inclusion of the Pennsylvania racetrack Pocono Downs as a discontinued operation. Penn National recently agreed to sell it.

Adjusted earnings per share, pegged at 58 cents including 2 cents due to Pocono Downs, topped Wall Street's forecast by a penny, according to one banking analyst who noted that investors have "high expectations" for the company, which plans to expand with slot development in Pennsylvania and Maine.

While the company treated the results as better than expected, Penn's shares dropped $1.37 (3.4%) to $38.88 in midday trading on Nasdaq.

Deutsche Bank analyst Marc Falcone said earnings before interest, tax, depreciation and amortization at three southern properties affected by the hurricane season lagged his estimates by $4 million.

Another analyst, Fulcrum Global Partner's Joe Greff, dropped his 2005 estimates from $2.44 to $2.30 due to slower than planned slots expansion at Charles Town. The West Virginia racino should add 200 machines in the next year, 500 less than earlier expected. The Wall Street consensus target stands at $2.36.

Penn forecast fourth-quarter 2004 earnings from continuing operations of 40 cents, close to Wall Street's 41-cent target with the exclusion of Pocono.

According to the company, Penn National plans slot machine expansion in Pennsylvania to occur in early 2006 with a Maine slots parlor expected to be added in mid-2006.

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