The earnings are going to be declared soon, and that will be an important trigger for the stock. Penn National had earlier given a guidance of $0.68 EPS for Q2'13. In the last quarter, there was a 17% decline in net income and the revenues had grown by 8.5%. It had missed the analysts estimates of the revenues and EPS. On a sequential basis, the growth in revenue and net income was good. The stock has appreciated by 27% in the last one year. It has shown resilience by bouncing back after a sharp correction from 52 week high. Even during the last one month, it has appreciated by 8%. After such a rise, it is important that the company delivers good numbers. Slippages or negative surprises will not be welcome, and may lead to correction. This is also true because the valuations are a little stretched now with a trailing P/E of 28. In case of positive surprises, it is quite possible that the stock tests the recent highs, and even moves beyond that. The overall mood in the market is not bad, and that will help matters (if it remains this way). The overhang of the patent infringement lawsuit filed by MGT Capital Investments (MGT) will remain over the next few months. The Markman hearing date for that lawsuit has been fixed. The analyst opinion on Penn National remains mixed, with Nomura recently cutting the PT to $60 from $66. The consensus target of the analysts is $57.54 which indicates little upside from current levels. Penn is better than many of its peers who are making losses since many years. Like others, the debt on books has increased during the recent years, but again, Penn is relatively better off on leverage. Margins will be a key metric to watch in the earnings.
