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. The company appears to be overvalued, given its current financial metrics. Key ratios include a Price to Book Value of 0.80, an EV to EBITDA of 7.21, and an EV to Sales of 0.73, which suggest that while the company is trading at a discount relative to its book value, the overall valuation remains concerning due to its loss-making status and low return metrics.
In comparison to peers, Churchill Downs, Inc. has a fair valuation with an EV to EBITDA of 12.60, while Cinemark Holdings, Inc. is considered very attractive with an EV to EBITDA of 8.09. This indicates that PENN's valuation ratios do not favorably position it against its competitors. Additionally, PENN's stock has underperformed significantly against the S&P 500, with a YTD return of -3.08% compared to the index's 12.22%, and a 5-year return of -72.79% versus 96.61% for the S&P 500, reinforcing the notion that the stock is overvalued in the current market context.