## PENN, sales almost fully recovered

Current, target price USD81, 167 (+107%)

**Sales almost fully recovered,****cashflow positive & rising,****de leveraging,****only 0.41X assets,****expecting more upside than our other US stocks**

June 5th, 2021

1 minute read

Sales, almost fully recovered

Cashflow, positive & rising

1 minute read

Sales, almost fully recovered

- Sales increased by 24% in the first quarter to 1,275 million dollars, which is -1% compared to our forecast.
- This is after a -9% decline in the fourth quarter & brings the quarterly average growth to 53%
- We predict average growth of 4% a quarter in this next 12 months which will bring sales to 1,459 million dollars by the first quarter of 2022.

Cashflow, positive & rising

- Cashflow was positive 154 million dollars in the first quarter after positive 120 million dollars in the fourth quarter.
- Average quarterly cashflow is now positive 119 million dollars.
- We use higher investment spending of -36 million dollars, which with higher sales, gives a higher average quarterly cashflow of 261 million dollars in this next 12 months.

Balance sheet, lower leverage

Profit, expecting much higher

Value, only 0.41X assets

- With positive cashflow, the net leverage of cash minus total liabilities was -10,070 million dollars in the first quarter from -10,158 million dollars in the fourth quarter & -11,930 million dollars a year ago.
- With our forecast higher cashflow & assuming a dividend payout of -224 million dollars...
- ...net leverage will be -9,250 million dollars in 12 months time.

Profit, expecting much higher

- Net profit was higher at 91 million dollars in the first quarter from 13 million dollars in the fourth quarter from lower non cash costs.
- The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was up to -84%.
- We use the average -79% costs, to predict a higher next 12 months profit of 745 million dollars.

Value, only 0.41X assets

- PENN cumulative net capital is at -2,267 million dollars from the last four years.
- At the current market value of 12,590 million dollars, based on forecasts it’s 2.21X sales, 0.41X assets, 3.84X equity, with a 22.7% profitability & a 1.8% yield.
- Our free cashflow forecast is 1,043 million dollars. At 1.6% with a 0.4X adjustment, gives a 107% higher target price of 167 dollars.