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Caesars Entertainment Inc CZR

Morningstar Rating
$42.96 −0.51 (1.17%)
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Company Report

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.

Price vs Fair Value

CZR is trading at a 46% discount.
Price
$42.96
Fair Value
$91.00
Uncertainty
Very High
1-Star Price
$789.00
5-Star Price
$67.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Caesars' best-of-breed management has generated cost and revenue synergies from its merger with Eldorado.

Bears

Debt levels are elevated after the merger with Eldorado, which could elevate financing costs for future renovations and investment.

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News

Trading Information

Previous Close Price
$43.47
Day Range
$42.0443.38
52-Week Range
$38.3360.27
Bid/Ask
$42.55 / $42.96
Market Cap
$9.29 Bil
Volume/Avg
2.8 Mil / 3.7 Mil

Key Statistics

Price/Earnings (Normalized)
105.19
Price/Sales
0.80
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.71%

Company Profile

Caesars Entertainment includes about 50 domestic gaming properties across Las Vegas (58% of 2022 EBITDAR before corporate and digital expenses) and regional (59%) markets. Additionally, the company hosts managed properties and digital assets, the later of which produced material EBITDA losses in 2022. Caesars' U.S. presence roughly doubled with the 2020 acquisition by Eldorado, which built its first casino in Reno, Nevada, in 1973 and expanded its presence through prior acquisitions to over 20 properties before merging with legacy Caesars. Caesars' brands include Caesars, Harrah’s, Tropicana, Bally’s, Isle, and Flamingo. Also, the company owns the U.S. portion of William Hill (it sold the international operation in 2022), a digital sports betting platform.
Sector
Consumer Cyclical
Industry
Resorts & Casinos
Stock Style Box
Small Value
Total Number of Employees
51,000

Competitors

Valuation

Metric
CZR
LVS
DKNG
Price/Earnings (Normalized)
105.1927.57
Price/Book Value
2.049.3824.49
Price/Sales
0.803.785.49
Price/Cash Flow
4.9613.83
Price/Earnings
CZR
LVS
DKNG

Financial Strength

Metric
CZR
LVS
DKNG
Quick Ratio
0.601.261.05
Current Ratio
0.761.311.34
Interest Coverage
0.972.82−316.16
Quick Ratio
CZR
LVS
DKNG

Profitability

Metric
CZR
LVS
DKNG
Return on Assets (Normalized)
3.43%6.41%−11.51%
Return on Equity (Normalized)
27.28%33.98%−44.18%
Return on Invested Capital (Normalized)
13.64%9.69%−20.84%
Return on Assets
CZR
LVS
DKNG
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Resorts & Casinos Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
LVS
Las Vegas Sands CorpCknfck$38.6 Bil
GXYYY
Galaxy Entertainment Group Ltd ADRXdcjxr$23.5 Bil
GXYEF
Galaxy Entertainment Group LtdZtlfzw$23.5 Bil
SCHYF
Sands China Ltd Shs Unitary 144A/Reg SDzbgs$22.8 Bil
SCHYY
Sands China Ltd ADRXvpnhcr$22.8 Bil
MGM
MGM Resorts InternationalTktm$13.7 Bil
WYNN
Wynn Resorts LtdBkmdskw$11.3 Bil
MLCO
Melco Resorts and Entertainment Ltd ADRSdczrjv$3.1 Bil
PENN
PENN Entertainment IncKhbgb$2.8 Bil

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