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Caesars Entertainment’s Growth Drivers
Caesars Entertainment, Inc. (CZR – Free Report) is a casino-entertainment provider that is expected to benefit from its solid performance in Las Vegas, tech enhancements, and capital development projects. In the third quarter of 2022, the company delivered encouraging revenues with the net revenues in the Las Vegas segment increasing to $1,131 million as compared to $914 million reported in the year-ago quarter. The segment’s adjusted EBITDA also rose to $533 million from $400 million. These encouraging results were supported by strong leisure, group, and convention demand in the Las Vegas market.
The company is optimistic about future bookings and has witnessed an increase in group and convention room nights. It expects the return of the group and convention business and entertainment offerings to drive additional demand in the Las Vegas market.
Another growth driver for the company is its focus on digital initiatives. During the first quarter of 2023, the company emphasized certain tech enhancements to improve its product offerings and drive better customer engagement. These efforts include the launch of a new standalone iCasino app, testing of its in-house player account management system, and migration of sports-betting operations in Nevada to its Liberty tech stack. Product enhancements, including cash-out speed, customer service, parlay, and alternative line offerings will drive growth.
The company is also expanding in new markets to drive growth. It has announced a partnership with the Eastern Band of Cherokee Indians to build and develop Caesars Virginia and plans to expand into Nebraska with the development of a Harrah’s casino and racetrack. The company is also developing temporary facilities for the properties in 2023 and expects them to be fully operational in the near future.
Concerns for Caesars Entertainment
While the future looks bright for Caesars, the company has reported disruptions in its Regional segment. Severe winter weather in northern Nevada has negatively impacted visitation in Lake Tahoe and Reno properties, reducing the company’s revenue. Caesars Entertainment is also facing increased competition from new casino resorts in the Chicagoland area and Philadelphia.
In addition, Caesars is cautious of economic trends, including higher inflation and interest rates that could negatively impact the industry’s growth. Shares of the company have declined 17.8% in the past three months compared to the industry’s fall of 0.2%.
Zacks Rank & Key Picks
Caesars Entertainment currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Consumer Discretionary sector are MGM Resorts International (MGM – Free Report), Bluegreen Vacations Holding Corporation (BVH – Free Report), and Crocs, Inc. (CROX – Free Report).
MGM Resorts sports a Zacks Rank #1 and has a trailing four-quarter earnings surprise of 81%, on average. Bluegreen Vacations also sports a Zacks Rank #1 with a trailing four-quarter earnings surprise of 24.7%, on average. Crocs carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 19.6%, on average.
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