The stock has done well over the last one year with a 18% rise on a 52 week basis. Despite a 12% correction from the high made recently, it is still up 43% from its 52 week low made in November. Though the revenue growth has not been exceptional and the net income fell last year, the company has been able to report net profits during the last two years. This improvement in fundamentals over the past few years has helped the stock rise substantially. This rise has begun to stretch the fundamentals as the ttm P/E is now around 27 and the forward P/E for 2014 is just below 20. The PEG is also 2.54, which indicates moderate expectations on growth front. Performance in the last quarter also showed decline in net income on a yoy basis, though there was a 8.4% growth in revenues. The price to sales and price to book remain reasonable at 1.4 and 1.79 respectively. However, increase in debt over the past few years is a matter of worry for the company. The volumes over the last few days have been high, which indicate that there is some momentum on the downside. A deeper correction in the market may also put downward pressure on the stock. It is precariously poised around crucial levels, and a bounce is required to regain some strength. Negative news related to the patent infringement lawsuit filed by MGT Capital Investments (MGT) could also put pressure on the stock. Some news is expected on this front shortly. Many analysts are confident about the future of the gambling industry, and Penn may benefit from the growth over the next few years. The costs have to be controlled and the margins have to be improved continuously. In absence of focus on this front, the company may not be able to sustain the growth story.
