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Here's Why You Should Retain Caesars Entertainment (CZR) Stock
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Caesars Entertainment, Inc. (CZR - Free Report) will likely benefit from improving occupancy, strategic partnerships and increased sports betting volumes. Also, the focus on property development and digitalization bodes well.
However, increased expenses and competitive pressure are headwinds. Also, weather-related woes in the Regional segment are other concerns.
Let us discuss the factors that highlight why investors should retain the stock for now.
Factors Likely to Drive Growth
Improving occupancy: The company continues to benefit from robust occupancy. During first-quarter 2024, occupancy in Las Vegas reached 97.6%, a new record. CZR saw record first-quarter occupancy thanks to strong visitation. The company experienced a 23% year-over-year increase in net gaming revenues in the OSB segment and a 54% year-over-year increase in net gaming revenues in the iCasino segment.
Despite challenges, the Las Vegas segment delivered $440 million in adjusted EBITDAR. Operating results in the regional segment also showed sequential improvement each month during the quarter. The company is optimistic about the outlook for 2024 and beyond, with strong forward occupancy and ADRs. Also, prospects for group and convention remain encouraging.
Strategic partnerships: Caesars Entertainment continues to focus on partnerships to drive growth. On Mar 7, 2024, the company renewed its United States partnership with the National Hockey League (NHL), retaining its status as a Sports Betting and Gaming Partner. This multiyear extension grants Caesars Digital access to NHL-owned intellectual property to develop NHL-branded iCasino games for its online platforms in North America, including the Caesars Palace Online Casino. The company also unveiled a partnership with renowned chef Rick Bayless to introduce his acclaimed restaurant Tortazo to two of its destinations.
Sports Betting to Drive Growth: Strategic emphasis on expanding into sports betting is a positive development. In 2023, CZR focused on enhancing the sports betting experience with improvements in product and technology. The company is optimistic about its ability to enhance hold throughout 2024.
During first-quarter 2024, online sports betting net revenues increased 23% year over year. The hold rate also increased by approximately 80 basis points year over year to 6.7%. The company stated benefits from increased state or jurisdictional legalization, new product launches and improved customer adoption. As of Mar 31, 2024, the company operated sports betting in 31 jurisdictions in North America, out of which 26 offer mobile sports betting.
During the quarter, the company successfully launched mobile sports betting in North Carolina. Initial results are promising, with a faster customer sign-up rate compared with previous state launches. This led to a higher market share. CZR is focused on key priorities for the rest of the year.
Concerns
Image Source: Zacks Investment Research
Shares of the Zacks Rank #3 (Hold) company have declined 19.3% in the past year against the industry’s 15.6% growth. The downside can be attributed to decline in visitor volume owing to inclement weather in regional property locations. Additionally, the continued impact of competition associated with new casino resorts opening and ongoing construction disruption from renovation projects added to the downside.
Caesars Entertainment has been grappling with higher operating expenses. During first-quarter 2024, casino expenses came in at $852 million, up from $828 million reported in the prior-year quarter. Food and beverage expenses came in at $263 million compared with $251 million reported in the prior-year quarter. The company intends to monitor the economic situation to gauge the impacts of inflation and interest rate hikes.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 44.7% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share (EPS) indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 87.1% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.6% and 61.9%, respectively, from the year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 20.9% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from the year-ago levels.
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Here's Why You Should Retain Caesars Entertainment (CZR) Stock
Caesars Entertainment, Inc. (CZR - Free Report) will likely benefit from improving occupancy, strategic partnerships and increased sports betting volumes. Also, the focus on property development and digitalization bodes well.
However, increased expenses and competitive pressure are headwinds. Also, weather-related woes in the Regional segment are other concerns.
Let us discuss the factors that highlight why investors should retain the stock for now.
Factors Likely to Drive Growth
Improving occupancy: The company continues to benefit from robust occupancy. During first-quarter 2024, occupancy in Las Vegas reached 97.6%, a new record. CZR saw record first-quarter occupancy thanks to strong visitation. The company experienced a 23% year-over-year increase in net gaming revenues in the OSB segment and a 54% year-over-year increase in net gaming revenues in the iCasino segment.
Despite challenges, the Las Vegas segment delivered $440 million in adjusted EBITDAR. Operating results in the regional segment also showed sequential improvement each month during the quarter. The company is optimistic about the outlook for 2024 and beyond, with strong forward occupancy and ADRs. Also, prospects for group and convention remain encouraging.
Strategic partnerships: Caesars Entertainment continues to focus on partnerships to drive growth. On Mar 7, 2024, the company renewed its United States partnership with the National Hockey League (NHL), retaining its status as a Sports Betting and Gaming Partner. This multiyear extension grants Caesars Digital access to NHL-owned intellectual property to develop NHL-branded iCasino games for its online platforms in North America, including the Caesars Palace Online Casino. The company also unveiled a partnership with renowned chef Rick Bayless to introduce his acclaimed restaurant Tortazo to two of its destinations.
Sports Betting to Drive Growth: Strategic emphasis on expanding into sports betting is a positive development. In 2023, CZR focused on enhancing the sports betting experience with improvements in product and technology. The company is optimistic about its ability to enhance hold throughout 2024.
During first-quarter 2024, online sports betting net revenues increased 23% year over year. The hold rate also increased by approximately 80 basis points year over year to 6.7%. The company stated benefits from increased state or jurisdictional legalization, new product launches and improved customer adoption. As of Mar 31, 2024, the company operated sports betting in 31 jurisdictions in North America, out of which 26 offer mobile sports betting.
During the quarter, the company successfully launched mobile sports betting in North Carolina. Initial results are promising, with a faster customer sign-up rate compared with previous state launches. This led to a higher market share. CZR is focused on key priorities for the rest of the year.
Concerns
Image Source: Zacks Investment Research
Shares of the Zacks Rank #3 (Hold) company have declined 19.3% in the past year against the industry’s 15.6% growth. The downside can be attributed to decline in visitor volume owing to inclement weather in regional property locations. Additionally, the continued impact of competition associated with new casino resorts opening and ongoing construction disruption from renovation projects added to the downside.
Caesars Entertainment has been grappling with higher operating expenses. During first-quarter 2024, casino expenses came in at $852 million, up from $828 million reported in the prior-year quarter. Food and beverage expenses came in at $263 million compared with $251 million reported in the prior-year quarter. The company intends to monitor the economic situation to gauge the impacts of inflation and interest rate hikes.
Stocks to Consider
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Strategic Education, Inc. (STRA - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 44.7% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share (EPS) indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 87.1% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.6% and 61.9%, respectively, from the year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 20.9% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from the year-ago levels.