Caesars Earnings: Digital Sales, Profits Shine Bright Amid Industry Competition; Shares Attractive

We think the main takeaways from no-moat Caesars’ fourth-quarter results were the solid revenue and EBITDA production of its digital business despite incremental competition from no-moat Penn’s ESPN Bet November launch. We don’t plan any material change to our $80 fair value estimate but expect to adjust our Morningstar Uncertainty Rating to High from Very High based on our quantitative model. Although we see shares as attractive for long-term investors, we posit price action could remain volatile as investors weigh the company’s roughly 6 times debt/EBITDA (including financial and lease obligations) in a high-financing-cost environment.