On Thursday, Penn National Gaming Inc. (NASDAQ:PENN) shares plummeted more than 21% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results before markets opened, missing analysts expectations on earnings.
However, revenue for the quarter increased by 33.6% from the same quarter a year ago, matching the consensus Street forecast of $1.51 billion.
The company posted FQ3 GAAP earnings per share of $0.52, falling substantially below the average for analyst expectations of $0.89.
The PENN stock is now down nearly 30% following Thursday’s pullback.
Is it risky to buy PENN stock?
From an investment perspective, Penn National Gaming shares trade at reasonable trailing 12-month and forward P/E ratios of 21.41 and 20.18, respectively. As a result, the stock could be a compelling option for value investors.
However, although analysts expect its earnings per share to increase by nearly 163% this year before falling by 11.84% next year, this year’s projection could be significantly missed based on its FQ3 earnings miss.
Therefore, it may be best to monitor performances before buying the stock.
Source – TradingView
Technically, Penn shares seem to have recently plummeted to complete a bearish breakout from an ascending channel formation. As a result, the stock has fallen deep into oversold conditions, creating an attractive opportunity to buy.
However, given Thursday’s FQ3 earnings miss, the stock could continue falling amid the intense bearish pressure.
Therefore, investors could target extended declines at about $51.72, or lower at $44.80. On the other hand, if the fall to oversold conditions triggers a rebound, PENN shares could find solid resistance at about $63.62, or higher at $71.62.
A potential technical buy?
In summary, although PENN’s recent quarterly earnings miss puts massive pressure on the stock price, the 21% decline could be overblown, thus creating a technical buy opportunity.
Therefore, with shares plummeting to oversold conditions amid reasonable valuation multiples, it may be a good time to place some short-term bets.
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