Is PENN Entertainment, Inc. overvalued or undervalued?

As of 2 November 2023, the valuation grade for PENN Entertainment, Inc. has moved from attractive to risky, indicating a significant shift in its perceived financial health. The company is currently considered overvalued, especially given its P/E ratio is not applicable due to losses, while its Price to Book Value stands at 0.80, and its EV to EBITDA is at 7.21. The ROCE is relatively low at 4.35%, and the ROE is negative at -0.03%, further emphasizing the company's struggles.
In comparison to its peers, PENN Entertainment's valuation metrics are concerning. For instance, Cinemark Holdings, Inc. has a P/E ratio of 15.68 and an EV to EBITDA of 11.12, reflecting a more favorable valuation. Other peers like Madison Square Garden Sports Corp. and Cedar Fair LP also show higher risk profiles, but their valuations are still more stable than PENN's. Notably, PENN's stock has underperformed against the S&P 500 over the last year, with a return of -13.72% compared to the index's 10.26%, reinforcing the notion that it is currently overvalued.