Here's Why You Should Retain Caesars Entertainment (CZR) Stock
Caesars Entertainment, Inc. CZR is likely to benefit from solid Las Vegas performance, strategic partnerships and expansion projects. However, a decline in traffic from pre-pandemic levels is a 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 segment were $1,077 million compared with $1,017 million in the year-ago quarter. The upside was backed by a rise in hotel occupancy (93.6%) and higher gaming, food and beverage volumes. Caesars Entertainment revealed that while attrition remains higher than normal, it began witnessing the return of conventions to Las Vegas. The company expects the return of the group and convention business and entertainment offerings to drive incremental demand in the Las Vegas market.
Caesars Entertainment continues to focus on partnerships to drive growth. To this end, the company entered into an exclusive naming rights partnership to rebrand the Superdome in New Orleans as the Caesars Superdome. It has formed partnerships with the NFL, NBA, NHL and MLB and is the exclusive odds provider for ESPN and CBS Sports.
The company intends to create new partnerships among collegiate and professional sports teams. The selection of such partnerships provides the company with exclusivity to access certain professional sports leagues and teams, sporting event facilities and sports television networks for tickets, suites and advertising, marketing and promotional and sponsorship opportunities.
The company focuses on expansion projects to drive growth. During the third quarter of 2022, the company stated progress regarding the construction of its new hotel tower and additional entities at the New Orleans property. Also, it stated plans to open casinos in Danville and Columbus by mid-2023. Also, it stated that expansion at Harrah's Hoosier Park is underway. Given the improving group and convention trends in Las Vegas coupled with the return of international consumers, the company anticipates the development projects to boost return on the investment in the upcoming periods.
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Shares of the company have gained 26.1% in the past three months compared with the industry’s increase of 21%.
Concerns
During the third quarter of 2022, the company reported disruptions in operations (within Regional segment) concerning renovations and capital projects at Harrah’s New Orleans and Atlantic City properties. Also, it witnessed increased competition from the opening of a new casino resort in Gary, IN. Although most properties are now open, traffic is lower than pre-pandemic levels. Given the uncertainty around the crisis, chances of operational restrictions (imposed by governmental authorities), reimposing stay-at-home orders and travel restrictions cannot be ruled out.
Zacks Rank & Key Picks
Caesars Entertainment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. WWE, OneSpaWorld Holdings Limited. OSW and Manchester United plc MANU.
World Wrestling Entertainment currently sports a Zacks Rank #1. WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 75.9% in the past year.
The Zacks Consensus Estimate for WWE’s 2023 sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.1%, on average. Shares of OSW have increased 5.7% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.
Manchester currently sports a Zacks Rank #1. MANU has a trailing four-quarter earnings surprise of 34.4%, on average. Shares of MANU have gained 67.2% in the past year.
The Zacks Consensus Estimate for MANU’s 2024 sales and EPS indicates a rise of 11.4% and 27.8%, respectively, from the year-ago levels.
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World Wrestling Entertainment, Inc. (WWE) : Free Stock Analysis Report
Caesars Entertainment, Inc. (CZR) : Free Stock Analysis Report
Manchester United Ltd. (MANU) : Free Stock Analysis Report
OneSpaWorld Holdings Limited (OSW) : Free Stock Analysis Report
