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Here's Why You Should Retain Caesars Entertainment (CZR) Stock

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·4-min read
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Caesars Entertainment, Inc. CZR will likely benefit from improving occupancy, regional destination properties and expansion efforts. This and focus on rebranding and remodeling initiatives bode well. 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

Improvement in occupancy and bookings have been a driving factor for the company. During first-quarter 2022, occupancy in Las Vegas reached 83%, with weekend and midweek occupancy attaining 95% and 77%, respectively. During the quarter, group rooms night represented nearly 13% of occupied room nights in Las Vegas, up from 11% in the second half of 2021. The upside was primarily driven by pent-up demand and solid booking trends. Going forward, the company is optimistic about booking trends as it is witnessing increased bookings for group and convention room nights. It expects an uptrend in bookings to sustain in 2022 and beyond.

Caesars Entertainment has been benefiting from solid regional performance. In the first quarter of 2022, the company reported encouraging revenues and adjusted EBITDA. During the quarter, net revenues in the segment were $1,363 million compared with $1,191 million in the year-ago quarter. The segment’s adjusted EBITDA totaled $459 million compared with $393 million in the prior-year quarter. Removal of masks and vaccine mandates at certain properties in New Orleans added to the upside. The company anticipates the momentum to continue on the back of pent-up demand for travel and entertainment activities.

The company focuses on expansion projects to drive growth. During the first quarter, the company stated to have made progress concerning its land-based facility in Lake Charles and casino expansion in Pompano. Also, it stated that expansion plans for Harrah's Hoosier Park and Columbus Nebraska project are in the pipeline. The company remains optimistic with respect to its development projects and anticipates meaningful contributions on account of the same. Also, increased focus on rebranding and remodeling initiatives bode well. During the first quarter, the company reported positive returns with respect to the rebranded Horseshoe Indianapolis. Also, it made progress with room remodeling in Atlantic City. The company emphasized on rebranding opportunities in St. Louis, Black Hawk, Las Vegas and Florida. This and the expansion of new food and beverage and entertainment offerings are likely to drive growth in the upcoming periods.

Concerns

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Zacks Investment Research


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Shares of Caesars Entertainment have declined 62.4% in the past year compared with the industry’s fall of 47.8%. The dismal performance was mainly due to the coronavirus crisis. During the first quarter of 2022, the company reported cancellations and postponements of significant entertainment offerings, events and conventions in the Las Vegas segment owing to the resurgence of the Omicron variant. 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 Bluegreen Vacations Holding Corporation BVH, Caleres, Inc. CAL and MGM Resorts International MGM.

Bluegreen Vacations sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has increased 46% in the past year.

The Zacks Consensus Estimate for BVH’s current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.

Caleres sports a Zacks Rank #1. CAL has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of the company have declined 6.3% in the past year.

The Zacks Consensus Estimate for CAL’s current financial year sales and EPS suggests growth of 4.8% and 0.7%, respectively, from the year-ago period’s levels.

MGM Resorts sports a Zacks Rank #1. MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 30.6% in the past year.

The Zacks Consensus Estimate for MGM’s current financial year sales and EPS suggests growth of 28.1% and 240.3%, respectively, from the year-ago period’s reported levels.


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