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Caesars Entertainment (CZR) Down 6.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Caesars Entertainment (CZR). Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Caesars Entertainment due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Caesars Entertainment Q1 Earnings Top Estimates, Rise Y/Y

Caesars Entertainment reported solid first-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.

The upside was primarily driven by pent-up consumer demand, strong digital segment performance and improved marketing capabilities. Also, solid customer feedback with respect to capital projects (including Horseshoe, Indianapolis, Harrah's Pompano Beach and Horseshoe Lake Charles) added to the positives.

Earnings & Revenue Discussion

During the quarter, the company recorded an adjusted earnings per share (EPS) of 9 cents, beating the Zacks Consensus Estimate of 6 cents. In the prior-year quarter, the company reported an adjusted loss of $2.11 per share.

Net revenues during the quarter came in at $2,830 million, beating the Zacks Consensus Estimate of $2,740 million. In the prior-year quarter, the company generated net revenues of $2,292 million.

Segmental Performance

During the first 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.

Coming to the Regional segment, net revenues during the quarter came in at $1,389 million compared with $1,363 million reported in the year-ago quarter. The segment’s adjusted EBITDA came in at $448 million compared with the $459 million reported in the prior-year quarter.

Net revenues in the Caesars Digital segment in the first quarter came in at $238 million against $(53) million reported in the prior-year quarter. The segment’s adjusted EBITDA totaled $(4) million compared with the $(554) million reported in the year-ago quarter.

In the Managed and Branded segment, net revenues during the quarter came in at $69 million compared with $66 million reported in the prior-year quarter. The segment’s adjusted EBITDA came in at $19 million compared with the $20 million reported in the prior-year quarter.

Balance Sheet

As of Mar 31, 2023, the company’s cash and cash equivalents came in at $965 million compared with $1,038 million as on Dec 31, 2022.

Net debt, as of Mar 31, 2023, stood at $12,190 million compared with $12,047 million as of Dec 31, 2022.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 25.47% due to these changes.

VGM Scores

Currently, Caesars Entertainment has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Caesars Entertainment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Caesars Entertainment is part of the Zacks Leisure and Recreation Services industry. Over the past month, Norwegian Cruise Line (NCLH), a stock from the same industry, has gained 5%. The company reported its results for the quarter ended March 2023 more than a month ago.

Norwegian Cruise Line reported revenues of $1.82 billion in the last reported quarter, representing a year-over-year change of +249.1%. EPS of -$0.30 for the same period compares with -$1.82 a year ago.

For the current quarter, Norwegian Cruise Line is expected to post earnings of $0.28 per share, indicating a change of +124.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Norwegian Cruise Line. Also, the stock has a VGM Score of B.

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

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

Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report

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