The entertainment market is growing amid technological advancements and steady demand. So, investors could look to buy fundamentally strong entertainment stocks PENN Entertainment, Inc. (PENN), Century Casinos, Inc. (CNTY), and Canterbury Park Holding Corporation (CPHC).
With the entertainment sector becoming increasingly digital as high-speed internet connectivity boosts the growing demand for on-demand, personalized content, the industry is well-poised for growth in the long run. Technological advancements like virtual and augmented reality are transforming entertainment and media, offering novel and thrilling experiences to customers.
Moreover, owing to the increased availability of affordable mobile applications, growing digitalization, a selection of secure digital payment options, and an increase in the use of digital currency and websites, the online gambling industry is thriving.
The revenues of the U.S. online gambling market are expected to grow at a compound annual growth rate (CAGR) of about 17% to reach $9 billion by 2030.
According to Statista, total revenue in the entertainment segment is anticipated to expand at a CAGR of 10.5%, resulting in a projected market volume of $48.76 billion by 2027.
Given these factors, investors could consider the featured entertainment stocks. Let’s take a closer look at their fundamentals.
PENN Entertainment, Inc. (PENN)
PENN provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast; South; West; Midwest; and Interactive.
PENN’s revenue grew at a CAGR of 8.2% over the past three years. Its EBIT grew 19.6% over the past three years. In addition, its EBITDA grew at a CAGR of 16.5% during the same time frame.
In terms of the trailing-12-month net income margin, PENN’s 10.52% is 150.6% higher than the 4.20% industry average. Its 24.71% trailing-12-month EBITDA margin is 131.9% higher than the 10.65% industry average. Likewise, its 16.16% trailing-12-month EBIT margin is 122.2% higher than the industry average of 7.27%.
PENN’s total revenues increased 7% year-over-year to $1.67 billion for the fiscal year that ended March 31, 2023. The company’s net income increased 896.9% year-over-year to $514.4 million. Its EPS came in at $3.05, representing a significant increase over the prior-year quarter.
PENN’s EPS and revenue for the quarter ended June 30, 2023, are expected to increase 199.2% and 2.5% year-over-year to $0.45 and $1.67 billion, respectively. Over the past month, PENN has fallen 6.9% to close the last trading session at $24.73.
PENN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Entertainment - Casinos/Gambling industry, it is ranked #8 of 28 stocks. The stock has a B grade for Value, Momentum and Quality. Click here to see the additional ratings of PENN for Growth, Stability and Sentiment.
Century Casinos, Inc. (CNTY)
CNTY operates as a casino entertainment company in the United States, Canada, and Poland. It develops and operates gaming establishments, horse racing including off-track betting, and entertainment facilities.
CNTY’s revenue grew at a CAGR of 18.8% over the past three years. Its EBITDA grew at a CAGR of 47.0% over the past three years. Moreover, its EBIT grew at a CAGR of 64.2% over the same time frame.
In terms of the trailing-12-month EBIT margin, CNTY’s 16.33% is 124.5% higher than the 7.27% industry average. Its 22.56% trailing-12-month EBITDA margin is 111.8% higher than the 10.65% industry average. Likewise, its 6.32% trailing-12-month CAPEX/Sales is 97.6% higher than the industry average of 3.20%.
For the fiscal first quarter that ended March 31, 2023, CNTY’s net operating revenue increased 5.2% over the prior-year quarter to $108.51 million. The company’s earnings from operations increased 41.1% year-over-year to $18.40 million. Its net earnings increased 11.9% year-over-year to $3.03 million. Also, its adjusted EBITDA increased 9.4% year-over-year to $26.05 million.
CNTY’s EPS and revenue for the quarter ending September 30, 2023, are expected to increase 198.4% and 44.0% year-over-year to $0.27 and $162.09 million, respectively. Over the past nine months, CNTY has gained 16.3% to close the last trading session at $7.79
CNTY’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. CNTY is ranked #7 in the same industry. It has a B grade for Value and Momentum. We have also given CNTY grades for Growth, Stability, Sentiment, and Quality. Get all CNTY ratings here.
Canterbury Park Holding Corporation (CPHC)
CPHC engages in horse racing, casino, food and beverage, and real estate development businesses. The company operates through four segments: Horse Racing; Casino; Food and Beverage; and Development.
CPHC’s EBITDA grew at a CAGR of 26.4% over the past three years while its EBIT grew at a CAGR of 39.6% over the past three years. Additionally, its net income grew at a CAGR of 42.9% over the past three years.
In terms of the trailing-12-month levered FCF margin, CPHC’s 12.22% is 238.3% higher than the 3.61% industry average. Its 12.80% trailing-12-month net income margin is 204.8% higher than the 4.20% industry average. Likewise, its 9.08% trailing-12-month return on total assets is 149.2% higher than the industry average of 3.64%.
CPHC’s net income for the first quarter that ended March 31, 2023, increased 56.2% year-over-year to $2.77 million. The company’s EPS increased 54.2% year-over-year to $0.56.
Over the past month, the stock has gained marginally to close the last trading session at $22.80.
CPHC’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #8 in the Entertainment - Casinos/Gambling. It has a B grade for Value, Momentum, Sentiment, and Quality. Click here to see the other ratings of CPHC for Growth and Stability.
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PENN shares were trading at $25.18 per share on Monday morning, up $0.45 (+1.82%). Year-to-date, PENN has declined -15.22%, versus a 15.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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