Penn National Stock Has Penchant for Memorial Day Week Slumps

Posted on: May 27, 2022, 04:39h. 

Last updated on: May 27, 2022, 05:34h.

The Memorial Day trading week for US equity markets commences on Tuesday, May 31, as exchanges are closed Monday in observance of the holiday. With the shortened trading week beckoning, there are some trends to consider, including one that pertains to Penn National Gaming (NASDAQ:PENN).

Penn stock
A Barstool Sportsbook in Colorado. Penn National stock could be a tricky Memorial Day week bet. (Image: Denver Westworld)

Put simply, over the past decade, the regional casino giant is one of the worst-performing names in the S&P 500 during the Memorial Day trading week. To be fair, stocks of all stripes often struggle in this time frame with the first day of the week — Tuesday — setting the ominous tone.

Since 2010, despite a bullish market overall, Memorial Day Week has struggled. Tuesday is one reason for the poor weekly return averaging a slight loss with just five of 12 returns positive,” according to Schaeffer’s Investment Research. “The main culprit for the bad week has been horrible Fridays. Since 2010, Friday of Memorial Day week has averaged a loss of 0.63% with just 42% of those days positive.”

Penn is the only gaming equity on the research firm’ s historical list of the 25 worst-performing S&P 500 components during Memorial Day week, and it’s one of three travel and leisure names in the group. Chipotle and McDonald’s are the others. No casino stocks are part of the list of 25 top gainers for the upcoming week.

Near-Term Pain Possible for Penn Stock

Penn’s average Memorial Day week performance over the past decade is a loss of 1.32%, and the stock traded higher in just three of those 10 occasions, according to Schaeffer’s data.

Just three stocks, including McDonald’s, average steeper Memorial Day week losses. On the one hand, there are no guarantees these historical trends repeat every year. Plus, US stocks are coming off their best weekly showing since November, with Penn posting a gain of 1.54% for the week ending May 27.

Additionally, some other historical data points are worth noting in advance of the May 31 trading session.

“The longer-term Memorial Day week has outperformed the typical week for stocks. The index averages a 0.52% gain during the holiday week, but just a 0.17% gain during any other week. In more recent years, though, there has been an entirely different story. The S&P 500 declined an average of 0.50% during Memorial Day week, and was down as many times as it was up. Since 2010, the typical week has averaged a 0.22% gain, with nearly 60% of them positive,” notes Schaeffer’s.

Potential Positives for Penn

While it’s impossible to ignore the fact Penn stock is lower by almost 38% year-to-date, there are some potential positives to consider.

First, some analysts believe the largest regional casino operator’s shares offer credible value at current levels. Penn stock appears discounted relative to peers, and the current share price doesn’t adequately reflect potential growth from iGaming, Barstool Sportsbook, and theScore in Canada.

Second, it’s possible that even against the backdrop of high gas prices, summer travel activity is brisk. That could provide support for Penn’s land-based casinos.