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Caesars (CZR) Stock Up 32% in 6 Months: Will the Rally Last?

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Shares of Caesars Entertainment, Inc. CZR have surged 32.5% in the past six months, compared with the industry’s growth of 2.9%. The company is benefiting from partnerships and solid performance of the regional destination properties. Improvement in occupancy levels is encouraging as well. However, coronavirus-related woes persist. Let’s delve deeper.

Growth Drivers

Caesars Entertainment continues to focus on partnerships to drive growth. Recently, it announced the expansion of its collaboration with Nobu Hospitality, with two new Nobu Hotels and restaurants at Harrah's New Orleans and Caesars Atlantic City; a Nobu restaurant at Paris Las Vegas; and a refresh of the first Nobu Hotel at Caesars Palace, Las Vegas.

Earlier, the company expanded its partnership with the Arizona Diamondbacks and Caesars Superdome. It is committed toward expanding its relationships with leagues and professional sports teams.

On Aug 12, 2021, the company announced a collaboration with an American football team — Houston Texans — which has made Caesars Entertainment its official casino partner. Fiesta Bowl Organization is the most recent addition to Caesars Entertainment’s list of growing sports relationships. It emphasizes on sports betting expansion. To this end, the company formed a new Caesars Digital segment comprising sports betting, iGaming and poker.

During second-quarter 2021, occupancy in Las Vegas reached 89%, with weekend occupancy reaching 99%. In the previous quarter, the occupancy in Las Vegas was 63%, while weekend occupancy reached 85%. The upside was primarily driven by pent up demand and solid booking trends. Going forward, the company remains optimistic with respect to booking trends as it is witnessing increasing bookings for group and convention room nights for the second half of 2021.

The company continues to witness encouraging trends for its regional destination properties. In the second quarter, the company reported encouraging revenues, adjusted EBITDA and margin performance. During the quarter, net revenues in the segment amounted to $1,490 million compared with $114 million reported in the year-ago quarter.

Zacks Investment Research
Zacks Investment Research

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Concerns

The coronavirus pandemic has negatively impacted the company’s business, financial condition and results of operations for the three months ended Jun 30, 2021. The company witnessed restrictions across a number of states including Nevada. The impact of COVID-19 on its business remains uncertain. Risks pertaining to a delay in wide distribution of a vaccine or a lack of public acceptance of a vaccine could lead people to continue self-isolation and non-participation in the economy. Due to the uncertainty of the crisis, the company suspended its share repurchase program until further notice.

Caesars Entertainment carries a Zacks Rank #3 (Hold).

Top Leisure Picks

Bluegreen Vacations Holding Corporation BVH has a projected 2021 earnings growth rate of 172% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaWorld Entertainment, Inc. SEAS sports a Zacks Rank #1. Its bottom line has outperformed the Zacks Consensus Estimate in the trailing three quarters.

RCI Hospitality Holdings, Inc. RICK has a Zacks Rank #1 and a projected long-term earnings growth rate of 12%.


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Caesars Entertainment, Inc. (CZR): Free Stock Analysis Report

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