COMPANY PROFILE
Caesars Entertainment, Inc. is the largest casino-entertainment company in the US and one of the world's most diversified casino-entertainment providers. Since its beginning in Reno, NV, in 1937, Caesars Entertainment, Inc. has grown through development of new resorts, expansions and acquisitions. Caesars Entertainment, Inc.'s resorts operate primarily under the Caesars®, Harrah's®, Horseshoe®, and Eldorado® brand names. Caesars Entertainment, Inc. offers diversified gaming, entertainment and hospitality amenities, one-of-a-kind destinations, and a full suite of mobile and online gaming and sports betting experiences. All tied to its industry-leading Caesars Rewards loyalty program, the company focuses on building value with its guests through a unique combination of impeccable service, operational excellence and technology leadership. Boasting many of the world’s most prestigious gaming brands, including Caesars Palace®, Harrah’s®, Horseshoe®, Eldorado®, Silver Legacy®, Circus Circus® Reno and Tropicana®, among many others, we are the global leader in gaming and hospitality. While each of our over 50 world-class resorts offer its own unique amenities, all share a common goal of providing unparalleled family-style service and exhilarating experiences. 20 jurisdictions with sports betting plus the digital casino operations through their acquisition of William Hill.
Formed by the takeover of CZR by Eldorado Resorts and the combined company took the iconic Caesars brand name.
Style Factor Benefits
From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Caesar’s scores well as of 12/28/21:
85% high 3 year compounded sales growth
83% attractive margin expansion
75% low price to sales - the stock is cheaper than it looks given depressed group bookings
89% high EPS surprise rates
85% for a stock price thats furthest from current consensus analyst price targets
12/28/21 Update
Tailwinds appear everywhere in Vegas gaming, leisure travel and sports book expansion. The brick-n-mortar business is very strong even in the face of covid restrictions. They had fires in Tahoe, hurricanes in New Orleans and they’re still reaching record financial metrics. Group bookings are still down 80%+ so that’s the major catch-up opportunity across all the hotel and casino brands. Vegas + regional gaming continues to see strong demand, even if it’s been lumpy due to covid restrictions. On the digital business, they are in spend and monetize mode right now. They have 50+ properties and 65m CZR Rewards database to pull from to drive meaningful engagement. The digital business will take time to develop and the progress will not be linear but the trend towards sports gaming, in person and mobile have significant forward revenue and cash flow opportunities. Normally I would not have an allocation to the gaming sector but with the very smart CEO Tom Reeg, who was Eldorado’s CEO at the time of the takeover, and the recovery opportunity in services and leisure travel, I really like this opportunity for 2022. This is a U.S. allocation, no Macau in China or other locations, this allocation gets us exposure to the U.S. gaming opportunity through the largest operator in the U.S. CZR Rewards customers are a very loyal bunch and the incentives coming their way should keep them even more loyal with frequent engagement across LA, AZ, Vegas, MD, NJ, PA, IL, etc. The momentum should continue to get better and more smooth through all of 2022 as Omicron gets less worrisome and consumer fatigue for Covid goes parabolic. The company continues to acquire strategic assets while paying down debt and restructuring debt for better interest expense charges. They have reduced debt by $1B in 2020 reducing about $75m in annual interest payments which enhances free cash flow. 2022 should be a massive free cash flow generating year plus the year when they plow more cash back into the digital sports business. I love their sports book commercials, they are hilarious. They will continue to sell non-core properties and pay down more debt. About $5B of cash to deploy in 2022 is the current goal. Bottom line: the stock is much cheaper than it looks and will be much less levered than its been in a long time. That offers strong growth opportunities looking forward.