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Caesars Entertainment Corporation Message Board

  • investora2z investora2z Jun 21, 2013 8:03 AM Flag

    May remain under pressure

    The correction in the market may last for some time, and hence most of the stocks are likely to correct. For Caesars, yesterday's fall was accompanied by increased volumes and the profit booking may continue for some time. Despite a correction from the highs of around $18 made a few months ago, it remains nearly 180% above its 52 week low made in November. So the last few months have been good for investors in this stock. However, the near future may be difficult as it may not be easy for the stock to appreciate from the current levels. The rise has not been supported by a major turnaround in fundamentals, and the company is still reporting net losses. The last 2 – 3 years have seen an increase in losses and the book value per share is negative. The main problem is the increasing debt, which puts serious pressure on the margins due to extremely high interest payouts. The debt of $21.56 billion is huge compared with the revenues of $8.5 billion and even interest costs are difficult to support with the cash flows. The revenues have also fallen over the years. So unless there is a turnaround soon, the stock will remain under pressure. There is also news expected on the lawsuit filed by MGT Capital Investments (MGT) against casino gaming companies, including Caesar's subsidiary. The potential value of the claims is estimated to be between $300 million to $4.5 billion. Furthermore, a longer correction in the markets may put pressure on the stock. The traders are bearish on the stock and the short interest remains high. While this data is a little old, it still gives some idea about the sentiments. The growth in the overall market may help support the revenues, but net margins are the key metric to watch.

 
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