Penn Poised for Improving Finances in 2026, Says Credit Analyst

• Revamping of multiple regional casinos helps the outlook
• So does an improving picture for the company’s digital gaming unit
• Lease-adjusted leverage currently resides at 7x

In somewhat quiet fashion, shares of Penn Entertainment (NASDAQ: PENN) are up nearly 16% over the past month and it’s possible that resurgence is just getting started as some analysts point to an improving financial outlook for the largest regional casino operator.

Kim Noland, director of high-yield research at Gimme Credit, says Penn’s enhancement efforts at several of its regional casinos as well as improvements in its digital gaming unit could set the stage for better financial performance over the course of this year.

Management has forecast 2-3% cash flow growth for the 40+ bricks and mortar regional casinos that posted mostly declining results last year. Penn needs a good year to reduce lease-adjusted leverage from its recent high near 7x,” observes the analyst.

Penn’s primary landlord is Gaming & Leisure Properties (NASDAQ: GLPI). The operator’s overall debt stood at $11.27 billion at the end of last year, making its debt-to-equity ratio one of the highest in the casino gaming industry.

New Projects Position Penn for Upside

Penn recently announced a June 24 opening day for the revamped version of the Hollywood Casino in Aurora, Ill. Formerly a riverboat casino, it will now be onshore, potentially allowing the operator to boost earnings and revenue.

“The Hollywood Columbus Hotel Tower adds a regional destination resort at one of the companyʼs most successful existing properties,” adds Noland. “Finally, yet another riverboat to land-based casino conversion is the Hollywood Council Bluffs relocation that could open by late next year.”

The analyst also praised Penn for working out an agreement with hedge fund HG Vora that ends a lengthy spat between the two side. Last month, the gaming company announced the expansion of its board to 11 from eight members and the additions of Heather Ace, Jeffrey Fox, and Fabio Schiavolin to fill the new vacancies. That set the stage for a cooperation agreement with Vora.

Penn Trending in the Right Direction, But…

As the stock’s recent price action suggests, Penn is trending in the right direction and with ESPN Bet out of the way, there are pathways to digital gaming profitability, led by the Hollywood-branded iGaming platform.

Still, Penn is struggling to gain sports betting market share and Noland points out the operator’s “aggressive” financial policies may damp credit investors’ enthusiasm for the company’s bonds.

“The company remains committed to aggressive financial policies, including big share buybacks (over $350 million last year), having recently authorized a new $750 million repurchase program beginning in January 2026,” concludes the analyst. These policies temper our enthusiasm for the 2029 bonds, now trading at a yield-to-worst of 6.8%. However, based on our more positive outlook for the company this year, downside on the bonds is limited. We rate them outperform.”