Penn Entertainment: Investor Donerail Sees Value in Shares, and We Agree

No-moat Penn's shares moved 17% higher during May 31 trading, as the market cheered an activist letter from the Donerail Group, which has an investment in the casino operator. In Donerail's view, Penn's shares have underperformed peers due to the company's heavy investment in its interactive division, which Donerail complains has produced lackluster results to date. For this reason, Donerail believes Penn should relent from further capital outlays in its digital business and instead focus on its physical regional casino assets, which have produced steady results through various economic environments and could be worth $23-$30 per share assuming 2024 EBITDA multiples of 6.5 times-8 times.