Why is Caesars Entertainment (CZR) down 11.6% since its last earnings report?

About a month has passed since Caesars Entertainment (CZR) last reported earnings. Shares have lost about 11.6% in that time, 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 the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Caesars Entertainment’s First Quarter Earnings and Revenue Lag Estimates

Caesars Entertainment reported lackluster first-quarter 2024 results, with earnings and revenue missing the Zacks Consensus Estimate. Earnings and profits also declined year-on-year.

Discussion about earnings and revenues

For the quarter, the company reported adjusted loss per share of 55 cents, better than the Zacks Consensus Estimate of a loss of 3 cents. In the same quarter last year, the company recorded EPS of 9 cents.

Net revenue for the quarter was $2.7 billion, 2.9% off the consensus estimate of $2.8 billion. The company generated net revenue of $2.8 billion in the prior-year quarter.

Segment efficiency

In the first quarter, net revenues in Las Vegas segment was $1.03 billion, up from $1.13 billion in the year-ago quarter. The company reported record occupancy in Las Vegas, driven by the Super Bowl and international Chinese New Year visit, which was offset by lower-than-expected occupancy levels. Segment adjusted EBITDA was $440 million, compared to $533 million in the prior-year quarter.

In Regional segment, quarterly net revenues were $1.37 billion, down 1.7% year-over-year. The segment experienced weather-related weakness in January and early February. The openings of new CZR properties partially offset these negative results. Segment adjusted EBITDA reached $433 million, compared to $448 million in the prior-year quarter.

Net revenues for the first quarter of this year Digital Caesar segment amounted to USD 282 million, an increase of 18.5% year-on-year. Despite lower than expected dynamics in online sports due to unfavorable results of the Super Bowl and March Madness, this segment recorded strong revenue growth. Segment adjusted EBITDA was $5 million compared to $(4) million in the prior-year quarter.

In Managed and branded segment, net revenues for the quarter were $68 million, compared to $69 million in the prior-year quarter. Segment adjusted EBITDA was $18 million, compared to $19 million in the prior-year quarter.

Net revenues in Corporate and others segment was $(1) million compared to $3 million in the prior year. The segment’s adjusted EBITDA was $(43) million compared to $(38) million in the prior-year quarter.

Balance

As of March 31, 2024, Caesars Entertainment had cash and cash equivalents of $726 million, compared to $1 billion as of December 31, 2023.

Net debt as of March 31, 2024 was $11.71 billion, compared to $11.43 billion as of December 31, 2023.

How have estimates changed since then?

Investors have witnessed a downward trend in estimate revisions over the past month.

As a result of these changes, the consensus estimate moved by -39.48%.

VGM results

Right now, Caesars Entertainment has a weak Growth Score of F, but its Momentum Score is doing much better at C. However, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Caesars Entertainment carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Caesars Entertainment is part of the Zacks Leisure and Leisure Services industry. Over the past month, shares of the same industry Royal Caribbean (RCL) have gained 7.6%. More than a month ago, the company published its results for the quarter ended March 2024.

In the most recent quarter, Royal Caribbean reported revenue of $3.73 billion, representing a year-over-year change of +29.2%. EPS of $1.77 for the same period compared to -$0.23 a year earlier.

For the current quarter, Royal Caribbean is expected to report earnings per share of $2.69, representing a change of +47.8% from the prior-year quarter. The Zacks Consensus Estimate has changed +0.6% over the past 30 days.

Royal Caribbean carries a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM rating of B.

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