Penn National PENN FAIRLY VALUED Buying Index™ 6 Value …

Valuentum Retail Equity Research Ratings as of 10-Sep-2021 Data as of 9-Sep-2021

Buying Index™ 6 Value RatingEconomic Castle

Attractive

Investment ConsiderationsDCF ValuationRelative Valuation

Stock Chart (weekly) ValueCreation™ValueRisk™ValueTrend™Cash Flow GenerationFinancial LeverageGrowthTechnical EvaluationRelative StrengthMoney Flow Index (MFI)Upside/Downside Volume (U/D)Near-term Technical Support, 10-week MADCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™

ValueRisk™ Very Poor Poor Good ExcellentCompany Vitals Investment HighlightsMarket Cap (USD) $11,247Avg Weekly Vol (30 wks) 22,46230-week Range (USD) 61.02 - 142Valuentum Sector Next Generation5-week Return 19.8%13-week Return 13.2%30-week Return -30.6%Dividend Yield % 0.0% Firms that generate economic profits with little operating variability score near the top right of the matrix.

Dividends per Share 0.00 Relative Valuation Forward P/E PEG Price / FV

Forward Dividend Payout Ratio 0.0% Monster Beverage 36.3 2.7 95.4%Est. Normal Diluted EPS 4.55 Roku 720.3 NMF 97.3%P/E on Est. Normal Diluted EPS 18.4 Wayfair 60.1 7.5 86.7%Est. Normal EBITDA 1,930 Zoom Video 64.5 3.5 83.0%Forward EV/EBITDA 14.1 Peer Median 62.3 3.5 91.0%EV/Est. Normal EBITDA 10.6 Penn National NMF NMF 104.9%Forward Revenue Growth (5-yr) 17.8% Price / FV = Current Stock Price divided by Estimated Fair Value

Forward EPS Growth (5-yr) -206.1% Financial Summary ProjectedNMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year

Fiscal Year End: Dec-19 Dec-20 Dec-21

Returns Summary 3-year Historical Average Revenue 5,301 3,579 5,576Return on Equity 0.8% Revenue, YoY% 47.8% -32.5% 55.8%Return on Assets -1.0% Operating Income 572 -410 1,024ROIC, with goodwill 6.5% Operating Margin % 10.8% -11.5% 18.4%ROIC, without goodwill 7.7% Net Income 44 -669 391ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 0.8% -18.7% 7.0%Leverage, Coverage, and Liquidity Diluted EPS 0.37 -4.99 2.86In Millions of USD Diluted EPS, YoY % NMF NMF NMFTotal Debt 11,023 Free Cash Flow (CFO-capex) 513 202 392Net Debt 9,169 Free Cash Flow Margin % 9.7% 5.6% 7.0%Total Debt/EBITDA NMF In Millions of USD (except for per share items)

Net Debt/EBITDA -339.6 LARGE-CEBITDA/Interest 0.0 NEUTRALCurrent Ratio 2.4Quick Ratio 2.3

• Penn National may be a diversified operator ofgaming and pari-mutuel businesses, but both segmentsremain economically-sensitive and exposed to intensecompetition. The legalization of sports gambling in theUS is a clear positive, however.

NMF = Not Meaningful

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Structure of the Gaming and Hotels IndustryThe gaming industry is heavily regulated and particularly sensitive to discretionary spending. Significant future gaming revenue growth will come from the Asian markets, especially Macao. Possession of a gaming subconcession by the Chinese government is an advantage, though competition remains intense among existing Macao rivals. The hotels industry is highly competitive, with over 900 lodging management companies in the US alone. Demand for hotel rooms is very cyclical, and fluctuations in both occupancy rates and revenue per available room (RevPAR) should be expected. We're generally neutral on the structure of the group.

• The big news with Penn National has been itsinvestment in Barstool Sports, which launched itsSportsbook app in September 2020. App downloadshave been encouraging, and handle has beenimpressive out of the gates.

• Penn National's strategy is multi-fold: 1) digitizebrick-and-mortar through data analytics, launch innew states, support its Barstool integration, and rollout new product offerings. An omni-channel pursuitwill be necessary in a post COVID-19 world whereretail sportsbooks become mobile ones and regionalcasinos become iCasinos.

----- Actual -----

• Penn National's financial leverage is not comforting.Management estimates its lease-adjusted leverage is~4.0x at the end of the second quarter of 2021 (downfrom 5.7x at the end of 2019). Total liquidity stood at~$2.9 billion at the end of the second quarter of 2021,and traditional net debt measures have improved.

Medium 1High

Low• Penn National operates ~40 gaming and racingfacilities in ~20 states. It completed a tax-free spin-offof Gaming and Leisure Properties (GLPI) in 2013 andmade big bets on Pinnacle (2018) and Barstool Sports(2020). Penn National is now a big online sportsbetting and gaming player in the US. It was founded in1972 and is headquartered in Pennsylvania. Very High

BULLISHSTRONG

NEUTRALBULLISH

75.00

The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar).

POORMEDIUM

NEGATIVESTRONG

HIGHAGGRESSIVE

In early August 2021, Penn National announced it was acquiring Score Media and Gaming through a ~$2.0 billion cash-and-stock deal to further bolster its presence in the online sports betting arena.

FAIRLY VALUEDUNATTRACTIVE

Industry $80.00 $60.00 - $100.00 LARGE-CAP GROWTH Next Generation Disruptive Innovation

Visit us at www.valuentum.com

Penn National PENN FAIRLY VALUED Estimated Fair Value Fair Value Range Investment Style Sector

52.00

62.00

72.00

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102.00

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Valuentum Retail Equity Research (10=best) Data as of 9-Sep-2021


Attractive

Economic Profit Analysis

ValueCreation™ POOR Return on Invested Capital (ROIC)

ROIC - WACC Spread, 3-year historical average -1.6%ROIC - WACC Spread, 5-year projected average 10.3%These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC.

ValueTrend™ NEGATIVE

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC.

ROIC CalculationFiscal Year End: Dec-18 Dec-19 Dec-20

Earnings before InterestOperating Income after Depreciation 634 572 -410- Adjusted Taxes (at 21% of EBIT) 133 120 -86+ Amortization 6 8 16+ Non-cash Operating Items -17 239 625- Minority Interest 0 -1 0Earnings before Interest 490 699 317

Cost of Equity Invested CapitalRisk Free Rate Assumption Inventories 0 0 0Fundamental Beta (ERP multiplier) + Receivables 107 89 96Estimated Equity Risk Premium + Current Deferred Income Taxes 0 0 0Cost of Equity Assumption + Other Current Assets 91 117 135

+ Property, Plant and Equipment, Net 6,869 5,120 4,529After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 1,228 1,271 1,157Risk Free Rate Assumption + Intangibles 1,857 2,027 1,514Synthetic Credit Spread + Non Current Deferred Income Taxes 81 0 0Cost of Debt Assumption - Accounts Payable 31 40 33Cash Tax Rate Assumption - Other Current Liabilities 360 0 0After-tax Cost of Debt Assumption

Invested Capital, with goodwill 9,843 8,583 7,398Cost of Preferred Stock Invested Capital, without goodwill 8,614 7,312 6,241Preferred DividendsValue of Preferred Stock Return on Invested Capital, with goodwill 7.1% 8.0% 4.4%Cost of Preferred Assumption Return on Invested Capital, without goodwill 8.4% 9.4% 5.2%

In Millions of USD

Weighted Average Cost of Capital (WACC)ERP = Equity Risk Premium

21.0%8.7%

00

NA

9.3%

1.36.5%

12.8%

4.3%6.75%11.1%

Penn National receives a ValueTrend™ rating of NEGATIVE, which is based on thecompany's trailing three-year performance. The firm's ROIC (excluding goodwill) fellto 5.2% last year from its trailing 3-year average of 7.7%. We expect ROIC (excludinggoodwill) to be in the ballpark of about 26% by the end of our discrete forecast period,with downside risk to about 10% over that time period.

---------- Actual ----------

4.3%

$80.00 $60.00 - $100.00 LARGE-CAP GROWTH Next Generation Disruptive Innovation

The best measure of a firm's ability to create value for shareholders is expressed bycomparing its return on invested capital (ROIC) with its weighted average cost ofcapital (WACC). The gap or difference between ROIC and WACC is called the firm'seconomic profit spread. Penn National's 3-year historical return on invested capital(without goodwill) is 7.7%, which is below the estimate of its cost of capital of 9.3%.As such, we assign the firm a ValueCreation™ rating of POOR. In the chart to theright, we show the probable path of ROIC in the years ahead based on the estimatedvolatility of key drivers behind the measure. The solid grey line reflects the most likelyoutcome, in our opinion, and represents the scenario that results in our fair valueestimate.

Penn National PENN FAIRLY VALUED Estimated Fair Value Fair Value Range Investment Style Sector Industry

Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance of a company's operations, as in the case of companies with negative invested capital.


41.8%

25.7%

8.4% 9.4%

5.2%

9.6%

WACC, 9.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.5%49.5%

Equity

Debt

Preferred

Capital Structure

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Attractive

Growth Analysis

Revenue Growth AGGRESSIVE Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

Revenue3-year Historical

CAGR5-year Projected

CAGRPenn National USD 3,579 4.4% 17.8%

Monster Beverage USD 4,599 10.9% 11.3%

Roku USD 1,778 51.4% 36.3%

Wayfair USD 14,145 44.2% 10.9%

Zoom Video USD 2,651 159.6% 31.4%

Peer Median 47.8% 21.4%

Industry Median 21.3% 18.9%

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

EBITDA3-year Historical

CAGR5-year Projected

CAGRPenn National USD -27 -132.0% -347.2%


Roku USD 67 -267.4% 78.8%

Wayfair USD 780 -276.2% 9.7%

Zoom Video USD 793 384.4% 38.6%

Peer Median -128.3% 26.0%


In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year Net Income

3-year Historical CAGR

5-year Projected CAGR

Penn National USD -669 -212.2% -208.3%


Roku USD -18 -34.3% -321.0%

Wayfair USD 185 -191.1% 21.1%

Zoom Video USD 672 -533.7% 40.5%


Industry Median 8.5% -23.2%

In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.

Penn National's EBITDA expansion has trailed both that of its peer group and itsindustry group during the past three years. We expect the firm's pace of EBITDAgrowth to fall below that of both its peer group and industry group during the next fiveyears.Roku sports the highest expected EBITDA growth rate among peers.

Penn National's net income expansion has trailed both that of its peer group and itsindustry group during the past three years. We expect the firm's pace of net incomegrowth to fall below that of both its peer group and industry group during the next fiveyears. Zoom Video sports the highest net income growth rate among peers.




Penn National's revenue expansion has trailed the median of both its peer group and itsindustry group during the past three years. We expect the firm's pace of revenue growthto fall below the median of both its peer group and industry group during the next fiveyears. Our growth assessment of each firm is based on the firm's 5-year forwardrevenue CAGR. Penn National's future pace of revenue growth is AGGRESSIVE, inour opinion.

3,588

5,301

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Attractive

Cash Flow and Financial Leverage AnalysisCash Flow Generation STRONG Financial Leverage HIGH

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA. The red line shows the firm's normalized measure.

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year CFO


5-year Projected CAGR

Penn National USD 339 -9.6% 38.7%


Roku USD 148 -195.5% 58.2%

Wayfair USD 1,417 112.2% 8.9%

Zoom Video USD 1,471 323.1% 26.2%

Peer Median 61.8% 20.4%


In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year FCF


5-year Projected CAGR Source: Company Filings, Valuentum Projections

Penn National USD 202 -17.5% 37.2%


Roku USD 66 -346.5% 76.4%

Wayfair USD 1,231 -355.0% 6.1%

Zoom Video USD 1,391 293.1% 26.3%



In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases.

Penn National's cash flow from operations expansion has trailed both that of its peergroup and its industry group during the past three years. We expect the firm's cash flowfrom operations expansion to outpace its peer group and industry group during the nextfive years. Roku sports the highest expected cash flow from operations growth rateamong peers.

Penn National's free cash flow expansion has been greater than that of its peer groupbut has trailed that of its industry group during the past three years. We expect thefirm's free cash flow expansion to outpace its peer group and industry group during thenext five years. Roku sports the highest expected free cash flow growth rate amongpeers.


Firms that generate a free cash flow margin (free cash flow divided by total revenue)above 5% are usually considered cash cows. Penn National's free cash flow margin hasaveraged about 7.5% during the past 3 years. As such, we think the firm's cash flowgeneration is relatively STRONG. The free cash flow measure shown above is derivedby taking cash flow from operations less capital expenditures and differs fromenterprise free cash flow (FCFF), which we use in deriving our fair value estimate forthe company. For more information on the differences between these two measures,please visit our website at Valuentum.com. At Penn National, cash flow fromoperations decreased about 4% from levels registered two years ago, while capitalexpenditures expanded about 48% over the same time period.

Firms that exhibit high leverage tend to be more risky than firms with relatively lowdebt loads, all else equal. We measure financial leverage by taking a firm's currenttotal debt load and dividing it by the firm's trailing average 3-year annual EBITDA.Firms that are over 3 for this metric, we rate as having high leverage. Companies thathave less than 1.5 turns of leverage (or a measure below 1.5), we rate as having lowleverage. Penn National's normalized debt-to-EBITDA measure of about 17.62 puts itin the HIGH camp.



353

704

339

93

191137

260

513

202

Dec-18 Dec-19 Dec-20

Cash from Operations Capital Expenditures Free Cash Flow Penn National -normalized

leverage, 17.62

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Penn National- annual leverage Penn National - normalized leverageMedium Threshold HighThreshold

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Attractive

Valuation Analysis

Valuation Assumptions Valuation BreakdownIn Millions of USD (except for per share items)

Revenue CAGR %Avg. EBIT Margin %Avg. Cash Tax Rate %Earnings Before Interest CAGR %Earnings Per Share CAGR %Free Cash Flow to the Firm CAGR %Earnings before interest = Net operating profits less adjusted taxes

Phase II --> III FCFF CAGR % 3.6% (II) 3% (III)Cost of Equity %After-tax Cost of Debt %Discount Rate (WACC) %Synthetic credit spread = 6.75%

Phase I Present ValuePhase II Present ValuePhase III Present ValueTotal Firm Value

Net Balance Sheet Impact

Total Equity ValueDiluted Shares OutstandingFair Value per Share

DCF Valuation Summary Enterprise Free Cash FlowFiscal Year End: 12/31/2018 12/31/2019 12/31/2020

490 699 317269 414 367

93 191 137-70 332 15

- Acquisitions 1,945 1,359 138-1,209 -768 395

In Millions of USD

Source: Company Filings, Valuentum Projections

Company NameValuentum Buying

Index™Forward Price-to-

Earnings

Price/Earnings-to-Growth (PEG), 5-

yearEV/Est. Normal

EBITDA

5-year Forward Earnings per Share CAGR

3-year Hist Avg ROIC, without

goodwillDividend Yield

%

Stock Price / Fair Value Estimate

Penn National 6 NMF NMF 10.6 -206.1% 7.7% 0.0% 104.9%

Monster Beverage 7 36.3 2.7 19.9 13.7% 62.9% 0.0% 95.4%

Roku 3 720.3 NMF 65.2 -300.2% -64.0% 0.0% 97.3%

Wayfair 3 60.1 7.5 20.5 19.3% 42.7% 0.0% 86.7%

Zoom Video 3 64.5 3.5 33.5 38.3% Negative IC 0.0% 83.0%

Peer Median 3.0 62.3 3.5 27.0 16.5% 42.7% 0.0% 91.0%

Industry Median 5.0 32.7 2.4 26.1 -26.0% 22.0% 0.0% 96.3%

View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.


41.7 52.9

45.3 39.7

41.8 21.7

25.9 26.4

146.2 225.5

49.0 24.0

Company Metrics versus Peer and Industry Medians

P/E on Est. Normal Diluted EPS Forward EV/EBITDA

18.4 14.1

In Millions of USD

---------- Actual ----------

We think Penn National is worth $80 per share with a fair value range of $60.00 -$100.00. The margin of safety around our fair value estimate is driven by the firm'sMEDIUM ValueRisk™ rating, which is derived from an evaluation of the historicalvolatility of key valuation drivers and a future assessment of them. Our near-termoperating forecasts, including revenue and earnings, do not differ much from consensusestimates or management guidance. Our model reflects a compound annual revenuegrowth rate of 17.8% during the next five years, a pace that is higher than the firm's 3-year historical compound annual growth rate of 4.4%. Our model reflects a 5-yearprojected average operating margin of 19.6%, which is above Penn National's trailing 3-year average. Beyond year 5, we assume free cash flow will grow at an annual rate of3.6% for the next 15 years and 3% in perpetuity. For Penn National, we use a 9.3%weighted average cost of capital to discount future free cash flows.

Earnings before Interest+ Depreciation - Capital Expenditures - Change in Working Capital

Enterprise Free Cash Flow (FCFF)

Our future forecasts for key valuation drivers result in a future free enterprise cashflow stream. Above, we show how we calculate enterprise free cash flow and thehistorical performance of the metric for Penn National. Over the next five years, weexpect the firm's enterprise free cash flow to expand at about a 29% compoundannual growth rate. During years 6 through 20, we expect the measure to grow at a3.6% rate. Beyond year 20 (in perpetuity), we grow the firm's free cash flow atinflation (3%).

-9,169

10,685134.0

$80.00

9,2666,589

19,854

9.3%Results3,999

35.1%-206.1%28.8%

Long-term Projections

12.8%5.8%


5-year Projections In the chart below, we show the build up to our estimate of total enterprise value forPenn National and the break down to the firm's total equity value, which we estimateto be about 10.68USD billion. The present value of the enterprise free cash flowsgenerated during each phase of our model and the net balance sheet impact isdisplayed. We divide total equity value by diluted shares outstanding to arrive at our$80 per share fair value estimate.

17.8%19.6%21.0%


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Equity Value

Page 5



Attractive

Margin of Safety Analysis

Range of Potential Outcomes ValueRisk™ MEDIUM

Revenue Volatility 26.7%Gross Margin Volatility Greater than 50%Earnings (EBI) Volatility Greater than 50%Cash Flow (FCFF) Volatility Greater than 50%Fair Value Range 25.0%The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside ProbabilitiesProbability (fair value < $0) Less than 0.1%Probability (fair value > 2x current share price) 0.00%

Future Path of Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.

Our discounted cash flow process values each firm on the basis of the present value ofall future free cash flows. Although we estimate the firm's fair value at about $80 pershare, every company has a range of probable fair values that's created by theuncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in themarkets as stocks would trade precisely at their known fair values. Our ValueRisk™rating sets the margin of safety or the fair value range we assign to each stock. In thegraph above, we show this probable range of fair values for Penn National. We thinkthe firm is attractive below $60 per share (the green line), but quite expensive above$100 per share (the red line). The prices that fall along the yellow line, which includesour fair value estimate, represent a reasonable valuation for the firm, in our opinion.

We strive to answer a few questions that investors often ask: 1) What are the chancesof a total loss of investment in this company? and 2) What is the chance that thecompany is really worth twice what I paid for it? The probability (fair value < 0)strives to answer the first question. It indicates the chance that the firm mayencounter insolvency based on the characteristics of its cash flow stream, capitalstructure, and risk profile. The probability (fair value > 2x current share price) strivesto answer the second question. It is our best estimate of whether investors areparticipating in a half-off sale by buying the company's shares at current prices.

We estimate Penn National's fair value at this point in time to be about $80 per share.As time passes, however, companies generate cash flow and pay out cash toshareholders in the form of dividends. The chart to the right compares the firm's currentshare price with the path of Penn National's expected equity value per share over thenext three years, assuming our long-term projections prove accurate. The range betweenthe resulting downside fair value and upside fair value in Year 3 represents our bestestimate of the value of the firm's shares three years hence. This range of potentialoutcomes is also subject to change over time, should our views on the firm's future cashflow potential change. The expected fair value of $115 per share in Year 3 representsour existing fair value per share of $80 increased at an annual rate of the firm's cost ofequity less its dividend yield. The upside and downside ranges are derived in the sameway, but from the upper and lower bounds of our fair value estimate range.



Penn National receives a ValueRisk™ rating of MEDIUM based of the historicalvolatility of key drivers of economic value creation. The fair value range sets themargin of safety around our fair value estimate of the firm's shares.


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Page 6



Attractive

Technical Analysis

Technical Evaluation BULLISH Money Flow Index (MFI) NEUTRAL

30-week Price and Volume Chart (weekly)Relative Price Strength STRONG

5-week Company Performance 19.8%5-week Market Benchmark Performance 2.6%5-week Relative Performance vs. Market Benchmark 17.1%13-week Company Performance 13.2%13-week Market Benchmark Performance 7.5%13-week Relative Performance vs. Market Benchmark 5.7%30-week Company Performance -30.6%30-week Market Benchmark Performance 17.5%30-week Relative Performance vs. Market Benchmark -48.1%

Upside/Downside Volume BULLISH Timeliness Matrix™ Equity Valuation

Relative Strength

Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix.


Weak

Companies that are undervalued and showing near-term relative price strength couldrepresent timely buys, as the stock may be attractive to both value and momentuminvestors. A cross section of the firm's equity valuation and its relative share pricestrength is shown in the matrix above. We tend to prefer undervalued stocks that have strong pricing momentum, also called Valuentum stocks.

The level and trend of the Upside/Downside (U/D) volume ratio reveals whetherinstitutional participation has been bullish or bearish as of late. Penn National's U/Dvolume ratio of 1 is not only greater than 1 but also is better than its trailing average,indicating BULLISH institutional interest during the past several weeks.

Strong 1Neutral

The firm's near-term moving average (5-week, grey line) and medium-term movingaverage (13-week, red line) are shown in the chart above. Typically, when a shorter-term moving average crosses a medium- or longer-term moving average from below, itrepresents a bullish signal. If the short-term moving average crosses from above, tradersoften view this as bearish. Penn National's 5-week moving average resides above its 13-week measure, indicating a BULLISH trend. Such a move could indicate a reversal inthe firm's 30-week downtrend.

The Money Flow Index (MFI) is an oscillator that uses price and volume to measurebuying and selling pressure. Chartists often look for overbought (above 80) andoversold (below 20) levels to warn of unsustainable near-term price extremes. PennNational's MFI of 40 (green line) is neutral, suggesting the firm's stock is neitheroverbought nor oversold at this time. However, a score below 50 tends to favor bears.The MFI can also be used to gauge the strength or weakness of a firm's price trend. InPenn National's case, its stock price and money flow neither reveals a bullish norbearish divergence, further supporting our neutral view on its money flow action.

A firm's relative price strength can be assessed over any number of time horizons. Weshow the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below.In arriving at our relative strength rating for each company, we assess the past 13weeks, which includes the market's reaction to the firm's most recently reportedquarter, where applicable, and other more recent economic events. During the past 13weeks, Penn National's shares returned 13.2%, while the market benchmark returned7.5%. We think Penn National's 13-week relative price performance is STRONG.

In the chart above, we pinpoint the heaviest accumulation or distribution week of thefirm, determined by the week with the highest trading volume during the past 30 weeks.A heavy accumulation (buying) or distribution (selling) week often determines thefuture near-term direction of the firm's share price, as money managers continue tomove in or out of the stock in the days and weeks ahead driving the stock up or down,respectively. For Penn National, the week with the highest trading volume out of thelast 30 weeks was a week of heavy selling, or distribution (red bar). Such marketactivity could indicate a reversal of an uptrend or further confirmation of a downtrend.

Overvalued Fairly Valued Undervalued

Estimated Fair Value Fair Value Range Investment Style Sector Industry $80.00 $60.00 - $100.00 LARGE-CAP GROWTH Next Generation Disruptive Innovation

Penn National PENN FAIRLY VALUED

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Stock Price

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Overbought Line

Oversold Line18

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Attractive

Pro Forma Income Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

Total Revenue 3,588 3,579

Cost of Goods Sold 2,335 2,858

Selling, General and Administrative Expenses 619 1,131

Other Operating Expenses 0 0

Operating Income 634 (410)

Unusual items 0 0

Operating Income, including unusual items 634 (410)

Interest Expense (538) (543)

Other Non-operating Income (5) 119

Pre-tax Income 91 (834)

Income Taxes (4) (165)

Income after tax 95 (669)

Minority Interest and Equity Income 0 0

Net Income, excluding extra items 95 (669)

Income Available to Common, excluding extra items 95 (669)

Diluted Earnings per Share, excluding extra items 0.94 (4.99)

Diluted Weighted Shares Outstanding 100.3 134.0

Source: Company Filings, Xignite, Valuentum Projections

117.8 136.7 139.4


0.37 2.86 3.04

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

44 391 424

44 391 424

1 0 0

43 391 424

43 104 113

86 495 536

48 14 14

(534) (543) (543)

0 0 0

572 1,024 1,065

572 1,024 1,065

0 0 0

3,542 3,262 3,503

1,188 1,291 1,386

5,301 5,576 5,955



---------- Projected ----------


Page 8



Attractive

Pro Forma Balance Sheet -------------------- Historical --------------------


AssetsTotal Cash (including marketable securities) 480 1,854Inventory 0 0Accounts Receivable 107 96Other Current Assets 91 135Total Current Assets 678 2,085

Gross Fixed Assets 9,247 7,404(Accumulated Depreciation) (2,378) (2,875)Net Property, Plant, and Equipment 6,869 4,529

Goodwill, Net 1,228 1,157Intangibles, Net 1,857 1,514Other Long-term Assets 329 5,382Total Assets 10,961 14,667

LiabilitiesAccounts Payable 31 33Other Current Liabilities 578 709Current Portion of Long-term Debt 130 117Total Current Liabilities 738 859

Long-term Debt 9,431 10,906Other Long-term Liabilities 61 246Total Liabilities 10,230 12,011

Preferred Stock 0 0

Shareholders' EquityCommon Stock and Additional Paid in Capital 1,728 3,192Retained Earnings (968) (507)Other Equity (28) (29)Total Shareholders' Equity 731 2,656

Total Liabilities and Shareholders' Equity 10,961 14,667




14,195 15,326 16,010

(28) (29) (29)1,853 3,272 3,925

1,720 3,417 3,646162 (116) 308

0 0 0

12,342 12,054 12,085

11,094 10,906 10,906342 246 246

906 902 933

755 747 775110 117 117

40 38 41

14,195 15,326 16,010

2,027 1,498 1,4825,134 5,382 5,382

5,120 4,535 4,576

1,271 1,157 1,157

7,805 7,815 8,329(2,685) (3,280) (3,753)

117 135 135643 2,753 3,414

0 0 089 148 156

437 2,471 3,123

---------- Projected ----------


Estimated Fair Value Fair Value Range Investment Style Sector Industry $80.00 $60.00 - $100.00 LARGE-CAP GROWTH Next Generation Disruptive Innovation

Penn National PENN FAIRLY VALUED

Page 9



Attractive

Pro Forma Cash Flow Statement -------------------- Historical --------------------


Cash from OperationsNet Income 95 (669)Depreciation and Amortization 275 383Deferred Income Taxes 0 0Operating Gains Or Losses (17) 625Changes in Working Capital 0 0

Cash Flow from Operations 353 339

Cash from InvestingPurchase of Property, Plant, Equipment (93) (137)Other Investing Cash Flows (1,331) (97)Cash Flow from Investing (1,423) (234)

Cash from FinancingIssuance (Retirement) of Stock (43) 1,352Issuance (Retirement) of Debt 1,121 (11)Dividends Paid 0 0Other Financing Cash Flows 1,272 1,310Cash Flow from Financing 1,272 1,310

Foreign Exchange 0 0

Net Change in Cash 202 1,415




0 0 0

(26) 617 653

(122) 225 229

0 0 0(122) 0 0

(23) 225 229(76) 0 0

(608) (411) (514)

(191) (411) (514)(417) 0 0

704 803 937

239 0 00 (9) 23

422 421 4900 0 0

43 391 424



---------- Projected ----------


Page 10



Attractive

Disruptive InnovationDisruptive Innovation FAIRLY VALUED

Company Name TickerMarket Cap (USD-

mil) DCF Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

Beyond Meat BYND 7,011 FAIRLY VALUED VERY POOR HIGH POSITIVE BEARISH WEAK

Boston Beer SAM 6,871 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE NEUTRAL WEAK

Carvana Co. CVNA 21,372 FAIRLY VALUED VERY POOR HIGH POSITIVE VERY BEARISH STRONG

CRISPR Therapeutics CRSP 7,865 FAIRLY VALUED VERY POOR HIGH NEGATIVE BEARISH WEAK

Crocs CROX 9,525 FAIRLY VALUED EXCELLENT HIGH NEGATIVE BULLISH STRONG

DocuSign DOCU 52,611 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE VERY BEARISH NEUTRAL

ETSY ETSY 29,423 FAIRLY VALUED EXCELLENT HIGH POSITIVE BULLISH STRONG

First Solar FSLR 10,378 FAIRLY VALUED VERY POOR MEDIUM NEGATIVE BULLISH STRONG

Fiverr International FVRR 5,929 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BEARISH WEAK

GameStop GME 11,784 OVERVALUED EXCELLENT VERY HIGH NEGATIVE VERY BEARISH WEAK

Global Payments GPN 52,206 FAIRLY VALUED EXCELLENT LOW NEGATIVE NEUTRAL WEAK

IntercontinentalExchange ICE 66,689 FAIRLY VALUED EXCELLENT LOW NEGATIVE BULLISH NEUTRAL

JD.com JD 124,765 FAIRLY VALUED POOR MEDIUM NEGATIVE BULLISH STRONG

Lululemon LULU 55,059 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Mercadolibre MELI 93,682 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG

Monster Beverage MNST 50,498 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH WEAK

NASDAQ NDAQ 33,037 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Palo Alto PANW 45,204 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE NEUTRAL STRONG

Penn National PENN 11,247 FAIRLY VALUED POOR MEDIUM NEGATIVE BULLISH STRONG

Pinterest PINS 32,866 FAIRLY VALUED VERY POOR MEDIUM NEGATIVE BEARISH WEAK

Proto Labs PRLB 1,999 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Roku ROKU 41,488 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BEARISH WEAK

ServiceNow NOW 131,649 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE NEUTRAL STRONG

Slack Tech WORK 17,512 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BULLISH STRONG

Snap SNAP 109,606 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BULLISH STRONG

Splunk SPLK 24,783 FAIRLY VALUED GOOD MEDIUM NEGATIVE NEUTRAL STRONG

Stitch Fix SFIX 3,960 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Teradyne TER 22,335 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Uber UBER 70,098 FAIRLY VALUED VERY POOR VERY HIGH POSITIVE BEARISH WEAK

VeriSign VRSN 25,504 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Verisk VRSK 33,942 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE NEUTRAL STRONG

Virgin Galactic SPCE 5,561 FAIRLY VALUED POOR VERY HIGH NEGATIVE BEARISH WEAK

Wayfair W 26,700 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Zoom Video ZM 90,828 FAIRLY VALUED GOOD MEDIUM POSITIVE BEARISH WEAK


MID-CAP BLEND NEUTRAL

LARGE-CAP BLEND UNATTRACTIVE


LARGE-CAP BLEND NEUTRAL

LARGE-CAP GROWTH ATTRACTIVE

LARGE-CAP CORE ATTRACTIVE


MID-CAP BLEND UNATTRACTIVE


LARGE-CAP GROWTH NEUTRAL




SMALL-CAP VALUE ATTRACTIVE



LARGE-CAP GROWTH UNATTRACTIVE

LARGE-CAP GROWTH UNATTRACTIVE



LARGE-CAP BLEND ATTRACTIVE

LARGE-CAP VALUE ATTRACTIVE


LARGE-CAP BLEND ATTRACTIVE

LARGE-CAP VALUE ATTRACTIVE

MID-CAP BLEND UNATTRACTIVE

LARGE-CAP CORE NEUTRAL




MID-CAP BLEND ATTRACTIVE



The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.Shaded blue denotes that the firm has earned the highest rating for that respective category.Investment Style Relative Valuation

MID-CAP GROWTH NEUTRAL


We think the Disruptive Innovation industry is fairly valued at this time. The industry'smarket cap is trading between 80% and 120% of our estimate of its fair value based onour DCF process. Although we use a firm-specific ValueRisk™ measure to determinewhether a firm is undervalued or overvalued based on our DCF process, we consider anindustry to be undervalued if it is trading below 80% of our estimate of its fair valueand overvalued if it is trading at over 120% of our estimate of its fair value. We thinkthese fair value ranges are appropriate given the diversification benefits of holding abasket of stocks. Although there may be individual opportunities within the DisruptiveInnovation industry, we don't find the industry as a whole attractive based solely onvaluation.


104.9%

91.0%

96.3%

80%

85%

90%

95%

100%

105%

110%

Penn National Peer Median Disruptive Innovation

Page 11

Valuentum's Full Page Stock Report


BA

G

I

N

C

J

D

M

H

E

L

K

A DCF ValuationShows whether the firm is undervalued, fairly valued, or overvalued based on our DCF process and by how much.

B Valuentum Buying Index (VBI)Provides insight into the timeliness of an investment opportunity. We rank firms from 1 to 10 based on rigorous fiancial, valuation, and technical analysis. A 10 represents one of our top picks.

C Valuentum Value Rating (VVR) Indicates whether we think a firm is undervalued, fairly valued, or overvalued on the basis of our DCF process.

D Investment ConsiderationsEvaluates firms on 12 different measures, from the firm's growth and cash flow generation to the stock's money flow index and upside/downside volume. We reveal technical support and resistance levels.

E 30-week Price and Volume ActionDisplays the last accumulation or distribution week of the stock and historical price and volume action.

G Company VitalsShows sector,industry and other relevant company information.

H Business QualitySummary of the firm's ability to create value for shareholders compared wth the underlying risk of its operations.

I Normalized EPS and EBITDAEstimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

J Investment HighlightsOur opinion of the company, including analysis of its financial and technical strengths and weaknesses.

K Relative ValuationComparison of the firm's PE, PEG, and Price/FV ratios versus peers.

L Returns Summary3-year averages of the firm's key return measures, including return on invested capital, with and without goodwill.

M Leverage, Coverage, and LiquidityA snapshot of the company's financial health.

N Financial SummaryA summary of the proforma financial statements found in the extended report.

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Page 12

UNDERVALUED

FAIRLY VALUED

OVERVALUED

• Revenue Volatility • Margin Volatility • Earnings Volatility • Cash Flow Volatility

Historical firm-specific financial data generates our ValueCreation™, ValueRisk™, and ValueTrend™ ratings. The data provides the basis for our financial forecasts. Full annual forecasts of income statement, balance sheet, and cash flow statement items. Firm-specific cost of equity, cost of debt, weighted average cost of capital, and long-term growth and profitability measures estimated.

A complete three-stage free cash flow to the firm valuation model generates an estimate of the firm's equity value per share based on estimated future free cash flows.The volatility of key valuation drivers are estimated and a margin of safety is determined.

The firm's stock price is compared to the suggested margin of safety. If a firm's stock price falls below the lower bound of our estimated fair value range, it receives Valuentum's highest Value Rating.


About Valuentum

@Valuentum, we strive to stand out from the crowd. Mostinvestment research publishers fall into a few camps,whether it be value, growth, income, momentum, chartistor some variant of the aforementioned. We think each inits own right holds merit, but we think the combination ofthese approaches can be even more powerful. After all,stock price movements aren’t just driven by investors ofthe value or growth variety, but by all market participants.Therefore, we look at stocks from a variety of investmentperspectives in order to better understand and identifyideas. We want to provide relevant information.

The core of our process is grounded in rigorous discountedcash flow analysis and incorporates the concept of amargin of safety. We offer a fair value estimate for eachcompany and provide a relative valuation assessment inthe context of a company’s industry and closest peers. Across section of our ValueCreation™ and ValueRisk™ratings provides a financial assessment of a company’sbusiness quality, while our ValueTrend™ rating offersinsight into the trajectory of a firm’s economic profitcreation. The Economic Castle rating measures themagnitude of future economic value generation, and theDividend Cushion ratio assesses the financial capacity of acompany to keep raising its dividend.

Our analysis doesn’t stop there. We also offer a technicalevaluation of the stock as well as other momentumindicators. We not only want to reveal to readers whichfirms may be undervalued, in our view, but we also wantto provide readers with information to help them assessentry and exit points. Most research publishers focus onarriving at a target price or fair value estimate, but mayfall short of providing a technical assessment to bolsterbuy and sell disciplines. We strive to go the distance andprovide readers with answers--not half the story.

An explanation of our approach would not be complete ifwe didn’t describe our ideal stock idea. We’re lookingfor companies that are undervalued--both on a DCF basisand versus peers--have strong growth potential, have asolid track record of creating economic profits forshareholders with reasonable risk, are strong cash flowgenerators, have manageable financial leverage, and arecurrently showing bullish technical and momentumindicators. For dividend growth ideas, we look forcompanies that have both the capacity and willingness tokeep raising the dividend.

Can such stock ideas exist? Subscribe to Valuentum toreceive our best investment ideas and analysis onhundreds of stocks, dividends, ETFs and more.

Financial Forecasts

Financial Statement Analysis

Discounted Cash Flow Valuation

ModelValueRisk™

Rating

Valuentum Value Rating (VVR)

Page 13

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

@ Valuentum, we like to look at companies from anumber of different perspectives. The Valuentum BuyingIndex (VBI) combines rigorous financial and valuationanalysis with an evaluation of a stock's technicals to derivea rating between 1 and 10 for each company. The VBIplaces considerable emphasis on a company's discountedcash-flow (DCF) valuation, its relative valuation versuspeers (both forward PE and PEG ratios), and its technicalsin order to help readers assess entry and exit points on themost interesting ideas.

Let's follow the red line on the flow chart below to seehow a company can score a 10, the best mark on the index(a "Top Pick"). First, the company would need to be'undervalued' on a DCF basis and 'attractive' on a relativevalue basis. The stock would also have to be exhibiting

'bullish' technicals. The firm would need aValueCreation™ rating of 'good' or 'excellent', exhibit'high' or 'aggressive' growth prospects, and generate atleast a 'medium' or 'neutral' assessment for cash flowgeneration, financial leverage, and relative price strength.

This is a tall order for any company. Stocks that don'tmake the cut for a 10 are ranked accordingly, with theleast attractive stocks, in our opinion, garnering a ratingof 1 ("We'd sell"). Most of our coverage universeregisters ratings between 3 and 7, but at any given timethere could be large number of companies garneringeither very high or very low scores, especially at marketlows or tops, respectively.

The Best Ideas Newsletter portfolio puts the VBI intopractice.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

DCF FairlyValued

DCF Undervalued

Relative ValueUnattractive/Neutral

Relative Value Attractive

Relative ValueUnattractive/Neutral


Technicals Bearish: 1

Technicals Neutral: 2

TechnicalsBullish: 4

Technicals Bullish: 7

TechnicalsBearish: 6

Technicals >= BullishValueCreation(TM) >= GoodGrowth >= HighCash Flow Generation >= MediumFinancial Leverage <= MediumRelative Strength >= Neutral

Final Score: 10



TechnicalsBearish: 3

Relative Value Unattractive/Neutral











Initial Index Score

DCF Overvalued

Page 14

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firmsthat are trading with an appropriate discount to our fair value estimate receive anUNDERVALUED rating. Firms that are trading within our fair value range receive aFAIRLY VALUED rating, while firms that are trading above the upper bound of ourfair value range receive an OVERVALUED rating.

Company Vitals. In this section, we list key financial information and the sector andindustry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio,divides the current share price by last year's earnings (EPS) and then divides thatquotient by our estimate of the firm's 5-year EPS growth rate. The estimatednormalized diluted EPS and estimated normalized EBITDA represent the five-yearforward average of these measures used in our discounted cash flow model. The P/Eon estimated normalized EPS divides the current share price by estimated normalizeddiluted EPS. The EV/estimated normalized EBITDA considers the current enterprisevalue of the company and divides it by estimated normalized EBITDA. EV is definedas the firm's market capitalization plus total debt, minority interest, preferred stockless cash and cash equivalents.

Relative Value. We compare the firm's forward price-to earnings (PE) ratio and itsprice/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below thepeer median, the firm receives an ATTRACTIVE rating. If both are above the peermedian, the firm receives an UNATTRACTIVE rating. Any other combination resultsin a NEUTRAL rating.

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™indicates the firm's historical track record in creating economic value for shareholders,taking the average difference between ROIC (without goodwill) and the firm'sestimated WACC during the past three years. The firm's performance is measured alongthe scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms withEXCELLENT ratings have a demonstrated track record of creating economic value,while those that register a VERY POOR mark have been destroying economic value.

Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ratings. The box is an easy way for investors to quickly assess the business quality ofa company. Firms that generate economic profits with little operating variabilityscore near the top right of the matrix.

Timeliness Matrix. We compare the company's recent stock performance relative tothe market benchmark with our assessment of its valuation. Firms that areexperiencing near-term stock price outperformance and are undervalued by ourestimate may represent timely buys.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates thehistorical volatility of key valuation drivers, including revenue, gross margin, earningsbefore interest, and enterprise free cash flow. The standard deviation of each measure iscalculated and scaled against last year's measure to arrive at a percentage deviation foreach item. These percentage deviations are weighted equally to arrive at thecorresponding fair value range for each stock, measured in percentage terms. The firm'sperformance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH.The ValueRisk™ rating for each firm also determines the fundamental beta of eachfirm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH(1.3).

Range of Potential Outcomes. The firm's margin of safety is shown in the graphicof a normal distribution. We consider a firm to be undervalued if its stock price fallsalong the green line and overvalued if the stock price falls along the red line. Weconsider the firm to be fairly valued if its stock price falls along the yellow line.

Return on Invested Capital. At Valuentum, we place considerable emphasis onreturn on invested capital (both with and without goodwill). The measure focuses onthe return (earnings) the company is generating on its operating assets and is superiorto return on equity and return on assets, which can be skewed by a firm's leverage orexcess cash balance, respectively. ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates the

trajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIClast year that was greater than the 3-year average of the measure earn a POSITIVErating. Firms that earned an ROIC last year that was less than the 3-year average of themeasure earn a NEGATIVE rating.

Technical Evaluation. We evaluate a firm's near-term and medium-term movingaverages and money flow index (MFI) to assign each firm a rating along thefollowing scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERYBEARISH.

Cash Flow Generation. Firms' cash flow generation capacity are measured along thescale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cashflow margin (free cash flow divided by sales) greater than 5% receives a STRONGrating, while firms earning less than 1% of sales as free cash flow receive a WEAKrating.

Stock Price Relative Strength. We assess the perfomance of the company's stockduring the past quarter, 13 weeks, relative to an ETF that mirrors the aggregateperformance of constituents of the stock market. Firms are measured along the scaleof STRONG, NEUTRAL, and WEAK. Companies that have outperformed themarket index by more than 2.5% during this 13-week period receive a STRONGrating, while firms that trailed the market index by more than 2.5% during this 13-week period receive a WEAK rating.

Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score.

Money Flow Index (MFI). The MFI is a technical indicator that measures buyingand selling pressure based on both price and volume. Traders typically use thismeasure to identify potential reversals with overbought and oversold levels. We use a14-week measure to rank firms along the following scale: EXTREMELYOVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD(10-20), EXTREMELY OVERSOLD (0-10).

Upside/Downside Volume. Heavy volume on up days and lower volume on down days suggests that institutions are heavily participating in a stock's upward advance. We use the trailing 14-week average of upside and downside volume to calculate an informative ratio. We rank each firm's U/D volume ratio along the following scale: BULLISH, IMPROVING, DETERIORATING, and BEARISH.

GlossaryEstimated Fair Value. This measure is our opinion of the fair equity value per share ofthe company. If our forecasts prove accurate, which may not always be the case, wemay expect a firm's stock price to converge to this value within the next 3 years.

Investment Style. Valuentum uses its own proprietary stock-classification system.Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million;Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and$10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200billion. Blend: Firm's that we think are undervalued and exhibit high growthprospects (growth in excess of three times the rate of assumed inflation). Value:Firm's that we believe are undervalued, but do not exhibit high growth prospects.Growth: Firms that are not undervalued, in our opinion, but exhibit high growthprospects. Core: Firms that are neither undervalued nor exhibit high growthprospects.

Fair Value Range. The fair value range represents an upper bound and lower bound,between which we would consider the firm to be fairly valued. The range considers ourestimate of the firm's fair value and the margin of safety suggested by the volatility ofkey valuation drivers, including revenue, gross margin, earnings before interest, andenterprise free cash flow (the determinants behind our ValueRisk™ rating).

Page 15

PENN Rating History Price Fair Value VBI9-Sep-21 $83.93 $80.00 620-Nov-20 $69.88 $75.00 63-Dec-18 $22.58 $29.00 520-Jul-18 $35.54 $32.00 629-Mar-18 $26.26 $24.00 38-Dec-17 $28.53 $23.00 518-Aug-17 $20.38 $18.00 33-Apr-17 $18.55 $17.00 521-Nov-16 $13.98 $17.00 624-Jun-16 $13.95 $17.00 322-Jan-16 $14.05 $19.00 524-Jul-15 $18.87 $21.00 520-Feb-15 $16.39 $19.00 619-Sep-14 $11.74 $14.00 6

To send us feedback or if you have any questions, please contact us at [email protected]. We're always looking for ways to better serve your investment needs and improve our research.

Copyright (c) 2017 by Valuentum, Inc. All rights reserved.No part of this publication may be reproduced in any form or by any means.The information contained in this report is not represented or warranted to be accurate, correct,complete, or timely. This report is for informational purposes only and should not be considered asolicitation to buy or sell any security. No warranty or guarantee may be created or extended bysales or promotional materials, whether by email or in any other format. The securities or strategiesmentioned herein may not be suitable for all types of investors. The information contained in thisreport does not constitute any advice, especially on the tax consequences of making any particularinvestment decision. This material is not intended for any specific type of investor and does nottake into account an investor's particular investment objectives, financial situation or needs. Thisreport is not intended as a recommendation of the security highlighted or any particular investmentstrategy. Before acting on any information found in this report, readers should consider whethersuch an investment is suitable for their particular circumstances, perform their own due-diligence,and if necessary, seek professional advice. The sources of the data used in this report are believed by Valuentum to be reliable, but the data’saccuracy, completeness or interpretation cannot be guaranteed. Assumptions, opinions, andestimates are based on our judgment as of the date of the report and are subject to change withoutnotice. Valuentum is not responsible for any errors or omissions or for results obtained from the useof this report and accepts no liability for how readers may choose to utilize the content. In no eventshall Valuentum be liable to any party for any direct, indirect, incidental, exemplary, compensatory,punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, withoutlimitation, lost income or lost profits and opportunity costs) in connection with any use of theinformation contained in this document. Investors should consider this report as only a single factorin making their investment decision. Valuentum is not a money manager, is not a registered investment advisor, and does not offerbrokerage or investment banking services. Valuentum has not received any compensation from thecompany or companies highlighted in this report. Valuentum, its employees, independentcontractors and affiliates may have long, short or derivative positions in the securities mentionedherein. Information and data in Valuentum’s valuation models and analysis may not capture allsubjective, qualitative influences such as changes in management, business and political trends, orlegal and regulatory developments. Redistribution is prohibited without written permission. Readersshould be aware that information in this work may have changed between when this work waswritten or created and when it is read. There is risk of substantial loss associated with investing infinancial instruments. Valuentum's company-specific forecasts used in its discounted cash flow model are rules-based.These rules reflect the experience and opinions of Valuentum's analyst team. Historical data used inour valuation model is provided by Xignite and from other publicly available sources includingannual and quarterly regulatory filings. Stock price and volume data is provided by Xignite. Nowarranty is made regarding the accuracy of any data or any opinions. Valuentum's valuation modelis based on sound academic principles, and other forecasts in the model such as inflation and theequity risk premium are based on long-term averages. The Valuentum proprietary automated text-generation system creates text that will vary by company and may often change for the samecompany upon subsequent updates. Valuentum uses its own proprietary stock investment style and industry classification systems. Peercompanies are selected based on the opinions of the Valuentum analyst team. Research reports anddata are updated periodically, though Valuentum assumes no obligation to update its reports,opinions, or data following publication in any form or format. Performance assessment ofValuentum metrics, including the Valuentum Buying Index, is ongoing, and we intend to updateinvestors periodically, though Valuentum assumes no obligation to do so. Not all information isavailable on all companies. There may be a lag before reports and data are updated for stock splitsand stock dividends. Past simulated performance, whether backtested or walk-forward or other, is not a guarantee offuture results. For general information about Valuentum's products and services, please contact usat [email protected] or visit our website at www.valuentum.com.

The High Yield Dividend Newsletter portfolio, the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the Nelson Exclusive publication, is hypothetical and does not represent actual trading. Past performance is not a guarantee of future results.

Valuentum is an investment research publishing company.

Valuentum has not owned and does not own any shares of stocks mentioned on its website or in this report. President of Investment Research Brian Nelson does not own any shares of stocks mentioned on Valuentum's website or in this report. Majority share owner of Valuentum, Elizabeth Nelson, currently has exposure to HON in her retirement account.

If an independent contributor or employee mentions a stock he or she owns, we disclose it in the article/report that mentions the security. Please view individual articles on Valuentum's website for additional disclosures. Contact us to learn more about Valuentum's editorial policies.

Disclosures, Disclaimers & Additional Sources

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