Here's Why You Should Retain Caesars Entertainment (CZR) Stock
Caesars Entertainment, Inc. CZR is likely to benefit from solid Las Vegas performance, tech enhancements and capital development projects. However, weather-related headwinds pose concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Factors Driving Growth
Caesars Entertainment has been benefiting from solid Las Vegas performance. In the third quarter of 2022, the company delivered encouraging revenues. During the quarter, net revenues in the Las Vegas segment came in at $1,131 million compared with $914 million reported in the year-ago quarter. The segment’s adjusted EBITDA amounted to $533 million compared with $400 million reported in the prior-year quarter. The upside was primarily driven by strong leisure, group and convention demand. Caesars Entertainment revealed that it began witnessing the pre-COVID return of conventions and groups to Las Vegas.
The company is optimistic about booking trends as it is witnessing increased bookings for group and convention room nights. The company expects the return of the group and convention business and entertainment offerings to drive incremental demand in the Las Vegas market.
Increased focus on digital initiatives bode well. During the first quarter of 2023, the company emphasized on certain tech enhancements to boost product offering and drive better customer engagement. This include a new standalone iCasino app (expected to launch during third-quarter 2023), testing of its in-house player account management system and migration of sports-betting operations in Nevada to its Liberty tech stack (ahead of the 2023 football season). The company emphasized on product enhancements, including cash-out speed, customer service, parlay and alternative line offerings to drive growth.
The company is inclined on expanding in new markets to drive growth. It announced partnership with the Eastern Band of Cherokee Indians to build and develop Caesars Virginia. Estimated at a budget of $650 million, the property will include a resort casino along with a 500-room hotel, casino floor a Caesars Sportsbook, a live entertainment theater and 40,000 square feet of meeting and convention space.
Also, it stated plans to expand into Nebraska with the development of a Harrah’s casino and racetrack (during third-quarter 2023). The casino development is expected to feature a new one-mile horse racing surface, a 40,000-square-foot-casino and sportsbook and a restaurant and retail space. In spite of being in the construction phase, the company stated plans to open temporary facilities (for the properties) in 2023.
Concerns
During the first quarter of 2023, the company reported disruptions in operations within the Regional segment. During the quarter, the regional segment was negatively impacted by severe winter weather, particularly in northern Nevada. It reported reduced visitation in Lake Tahoe and Reno properties on account of significant snowfall and unsafe travel conditions. Also, it witnessed increased competition from the opening of a new casino resorts in Chicagoland area and Philadelphia, PA.
Although most properties are now open, traffic is lower than pre-pandemic levels. CZR is cautious of the economic trends, including higher inflation and interest rates. Shares of the company have declined 17.8% in the past three months compared with the industry’s fall of 0.2%.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Caesars Entertainment currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are MGM Resorts International MGM, Bluegreen Vacations Holding Corporation BVH and Crocs, Inc. CROX.
MGM Resorts sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 81%, on average. The stock has increased 15.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGM’s 2024 sales and EPS indicates a rise of 1.4% and 22.3%, respectively, from the year-ago period’s estimated levels.
Bluegreen Vacations sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of the company have increased 9.8% in the past year.
The Zacks Consensus Estimate for BVH’s 2023 sales and EPS indicates a rise of 3.6% and 17.6%, respectively, from the year-ago levels.
Crocs carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 90.1% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.2% and 5.7%, respectively, from the year-ago period’s levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MGM Resorts International (MGM) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
Caesars Entertainment, Inc. (CZR) : Free Stock Analysis Report
Bluegreen Vacations Holding Corporation (BVH) : Free Stock Analysis Report
