Why Is Caesars Entertainment (CZR) Down 25% Since Last Earnings Report?

A month has gone by since the last earnings report for Caesars Entertainment (CZR). Shares have lost about 25% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Caesars Entertainment Q3 Earnings Lag Estimates, Rise Y/Y

Caesars Entertainment reported mixed third-quarter 2021 results with earnings missing the Zacks Consensus Estimate and revenues beating the same. However, the top and the bottom line increased on a year-over-year basis.

Nevertheless, the company witnessed solid performance of its rebranded Caesars Sportsbook. Also, it will rebrand certain properties from its portfolio in 2022, to further elevate the customer experience.

Earnings & Revenue Discussion

In the quarter under review, adjusted earnings per share (EPS) came in at ($1.08), missing the Zacks Consensus Estimate of 8 cents. In the prior-year quarter, the company had reported an adjusted loss of $6.09 per share.

Net revenues during the quarter came in at $2,685 million, beating the Zacks Consensus Estimate of $2,658 million by 1%. In the prior-year quarter, the company reported net revenues of $1,377 million.

Segmental Performance

During the third quarter, net revenues from Las Vegas segment came in at $ 1,017 million compared with $304 million reported in the year-ago quarter. The segment’s adjusted EBITDA came in at $500 million compared with $43 million reported in the prior-year quarter.

Coming to Regional segment, net revenues during the quarter came in at $1,492 million compared with $1,055 million reported in the year-ago quarter. The segment’s adjusted EBITDA came in at $554 million compared with $350 million reported in the prior-year quarter.

Net revenues from Caesars Digital segment in the third quarter came in at $96 million compared with $39 million in the prior-year quarter. The segment’s adjusted EBITDA came in at $(164) million against $11 million reported in the year-ago quarter.

In the Managed and Branded segment, net revenues during the quarter came in at $79 million compared with $41 million in the prior-year quarter. The segment’s adjusted EBITDA came in at $22 million compared with $12 million reported in the prior-year quarter.

Balance Sheet

As of Sep 30, 2021, the company’s cash and cash equivalents came in at $1,072 million compared with $1,776 million as on Dec 31, 2020.

Net debt as of Sep 30, 2021, stood at $13,292 million compared with $13,247 million as of Dec 31, 2020.

Other Developments

On the development front, the company stated to have made solid progress with respect to its land-based facility in Lake Charles (expected to finish by fourth-quarter 2022), Caesars Palace entrance in Las Vegas (first quarter 2022) and a new hotel tower in New Orleans. In Indiana, casino expansion at Indiana Grand is underway, with anticipated completions by January 2022. The company initiated $400 million capital plan in Atlantic City to remodel towers with new food and beverage, and entertainment options.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Caesars Entertainment has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Caesars Entertainment has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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