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Stock Analyst Update

Harrah's Missed Quarter Offers Buying Opportunity

Firm's growing free cash flow will enhance future shareholder value.

Mentioned:

Harrah's Entertainment's (HET) stock is a great buy for long-term investors as the shares currently trade at just six times operating cash flow, well below the S&P 500 index's 31 and the casino industry's 13. The 3.6% decline in its stock price Wednesday creates an attractive entry point, because the firm's growing free cash flow bodes well for future shareholder gains.

The firm reported lower-than-expected second-quarter earnings Wednesday, blaming an abnormally high percentage of losses to gamblers at its Rio casino in Las Vegas. Although it's not unusual for gamblers to win more than expected over a short period, time and percentages remain on the casino's side, and thus gamblers' losses should soon rebound to normal levels.

Richard Wilson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.