Caesars Entertainment Corp (NASDAQ:CZR)

CAPS Rating: 1 out of 5

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Member Avatar luckyinreno (< 20) Submitted: 9/14/2014 10:31:46 AM : Underperform Start Price: $12.51 CZR Score: -12.97

UNDERPERFORM - Causes: smoke, mirrors, the Gary Loveman management style, debt, over growth and flaws in the "customer lifetime value concept (I think they used to call this goodwill).
As a fairly new practicing fool I just found TMF radio broadcasts. The broadcast of 9/12/14, includes an interview with the author of "What Stays in Vegas" about and data collection in the casino industry and specifically CZR. Yes, data is collection about customers is a very important component of any successful business, but basing their valuable customers on the collected data didn't tell the whole story.
When Mr. Loveman came aboard from MIT, CEO Phil Satre lauded the concept of growth by measuring everything that could be measured and perpetually improving the scores of those measurements to have what sounded like everlasting prosperity. Time is telling a different story:
The economy was booming then crashing, Poor numbers were blamed on the economy. The economy got better and poor numbers were still blamed on the economy.
Once loyal, many customers left. One of the problems with the "lifetime value concept is that the numbers didn't show future cost of loosing the "lifetime value" of a customer but it eventually shows in earnings reports. Please note that I said "lifetime value of a customer" and not the customer him/herself. There's the flaw. In this theory It's seems that it's "lifetime value" that's important, not the customer. (Insert background music here, Bob Seger" ...feel like a number...) Perhaps the concept should be altered to reflect "possible customer lifetime value".
When an employee can't use discretion, a customer can leave and not come back. When it extends to a customer taking their friends and families, the problem multiples, and it has.
Significant increase in interest rates should send CZR to zero.

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Member Avatar Allstar13913 (99.82) Submitted: 9/12/2014 11:41:11 PM : Underperform Start Price: $12.51 CZR Score: -12.97

Drowning in debt. It's on its way back down now that the NJ internet gaming law has amounted to nothing.

My original pitch:
Caesar's currently has high debt levels and no clear way to pay off its debt. As a regional casino operator, it has no footprint in Asia and an inability to attract big customers. Management seems to be incompetent and is looking to expand operations in MA rather than pay down debt that is out-stripping revenues.

This was a horrible IPO that was foisted on the investing public.

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Member Avatar maxxx2004 (21.85) Submitted: 8/8/2014 12:36:53 PM : Underperform Start Price: $13.12 CZR Score: -3.83

Other States are eased their gambling laws recent years. Atlantic City is losing his Gambling Glory.and this sinking Ship will take with him Caesars too...

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Member Avatar pchop123 (79.73) Submitted: 8/6/2014 1:36:58 PM : Underperform Start Price: $13.79 CZR Score: +1.09

troubles in the Roman Empire

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Member Avatar jed71 (49.46) Submitted: 8/4/2014 1:51:06 PM : Underperform Start Price: $14.20 CZR Score: +3.61

How much debt does it take to generate $592MM in interest expenses in a single quarter? Answer : About $21.2 BILLION. That's right - more than $21 BILLION IN OUTSTANDING DEBT. For those following from home, if you subtract out intangible assets of $3.5BB, the total remaining TANGIBLE assets is slightly less than their outstanding debt burden. Someone else already pointed this out on a pitch from 2013 but it bears repeating : their quarterly interest payments represent just north of 28% of their total revenue production each quarter. So what are you really buying when you purchase this stock? It seems to me the creditors already OWN this company....

This stock is very scary and I don't get why anyone would buy into this. An enormous ($22.93) per share LOSS in 2013 and no signs of the losses slowing. Multiplying that loss by the 144MM shares outstanding and thats gives you a total loss of $2.9 BILLION in a single year. This might not be the reverse merger madness that I normally pitch, but the debt load and subsequent interest expenses here are just as crazy.

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Member Avatar dynamocap (64.23) Submitted: 8/1/2014 11:23:00 AM : Underperform Start Price: $15.80 CZR Score: +14.12

equity is completely worthless

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Member Avatar WPThatcher (41.64) Submitted: 7/28/2014 8:01:11 PM : Underperform Start Price: $17.21 CZR Score: +18.51

Atlantic City

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Member Avatar OneStepCloser (61.99) Submitted: 9/11/2013 10:43:25 PM : Underperform Start Price: $25.39 CZR Score: +62.26

Super bad fundamentals

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Member Avatar falu17 (38.88) Submitted: 8/9/2013 4:21:32 PM : Underperform Start Price: $18.70 CZR Score: +42.88

At some point, reality must set in... With long-term debt representing 77% of their balance sheet total, interest expenses of 25% (!) of their revenue, negative equity position due to continued losses, dropping casino revenues, I cannot understand their current share price and performance in 2013.

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Member Avatar marketsailor1945 (73.80) Submitted: 5/9/2013 1:59:36 PM : Underperform Start Price: $15.33 CZR Score: +29.75

Who let this thing go public? They have some great financiers, but unless their online business becomes the greatest thing of the 21st century I can't see them staying in business for too long.

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Member Avatar SaiyanBroker (42.61) Submitted: 3/13/2013 4:01:48 PM : Underperform Start Price: $15.78 CZR Score: +38.29

Thanks to my first account, I was able to identify Ceasar's Entertainment back in November as a good investment twice and made some decent money. What a pain to call it wrong on my CAPS, though. :P At the time, every fool was screaming that CZR was a bad investment, so I jumped on and said the same. Plus, analysts for the stock had consistently over-projected the earnings each quarter of last year. The pick seemed legit. Why then did I decide to jump on this stock with real money at the same time? It started with simple trend following that later became a good reason.

Well, here I go again (http://www.youtube.com/watch?v=i3MXiTeH_Pg )-- betting the downwards direction. I'm very skeptical about either direction, but I honestly have to say that I don't value this stock at this price. I sold all of my shares yesterday. (f -_- )f

Price/Book : 53.80 (<-- that is an absolutely ridiculous value by the way)
Price/Sales: 0.21

The POSITIVE:
What makes me believe more growth is still possible? For one, this is a gambling play; I've only been to a casino once in my life, so my knowledge of consumer mentality here is limited to my imagination. I find it hard to believe that so many investors would just jump up the band wagon here without insider knowledge. Although, admittedly I did just that. 8) Checking, as I'm sure AngsarJohn would say is the best website in the world, gurufocus, there is no mention of insider buying. The only possibility there is potentially illegal insider knowledge which, from a conspiracy theorist POV, is possible since crime and gambling follow hand in hand. The second reason is because of the relatively low P/S listed above. Considering that value, this is still a great investment opportunity. The price is understating the amount of sales. It could also be that by the end of Q1 (in 05/01), the book value of the company could increase to more accurately reflect where the company is at. My third reason is the strong upwards trend.

http://www.gurufocus.com/gurutrades/CZR

However, as many an experienced investor knows, when the elasticity of a growth curve becomes too great, a dramatic pullback is inevitable. I for one, see this happening soon- especially if the meteorologists are correct and we see a dry spell come from the FED soon.

The NEGATIVE:
So why am I red-thumbing this? On top of a ridiculous P/BV, the company has taken on $21.41 billion in debt and has $28.33 billion in liabilities totaling $49.74 billion. On a percent basis, the company has an averaged 5 years sales growth of (%3.91) and an averaged 5 years gross income growth of (%20.6). Basically, the 5 year trend for revenue has been in decline. EBITDA itself has also averaged an annual growth of (%9.79). Heck, even net operating cash flow has decreased YOY. I calculate it to average a gain of about (%36.4). That's a lot of risk for the investor! So, why has this stock been growing? Where has all of this money gone?

You can check me on my calculations if you'd like.
http://quotes.wsj.com/CZR/financials/annual/income-statement

The answer to that question is found in the assets of the company which have from 2011-2012 jumped from $1.837 billion to $3.949 billion most notably from a short term investment of $1.686 billion. Sadly, I didn't recognize this in 11/15 of last year and have paid for it with -236 points in MrOneHundred. *Face Palm* On the flip side, after I recognized the growing trend, I jumped on the band wagon with a few shares which later became more once I identified this sudden increase in assets. (An indication that this gambling empire is gaining a competitive edge.) The only article of significance to come out around that date was the one listed below this paragraph.

http://www.reuters.com/finance/stocks/CZR.O/key-developments/article/2641772

At this point, I simply can't value a company that has historically lost money, is projected to lose more money, and is consistently lower than analysts expectations- at least not at this price. It's too risky.

I could very well be proven wrong a second time on this stock and lose tons more points. Who will know if I'm right or wrong? Only Time... http://www.youtube.com/watch?v=7wfYIMyS_dI

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Member Avatar sandyrouth1 (< 20) Submitted: 2/27/2013 8:21:56 PM : Outperform Start Price: $12.12 CZR Score: -14.63

new jersey should be a bonanza for them

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Member Avatar ava5147 (< 20) Submitted: 2/27/2013 2:45:12 PM : Underperform Start Price: $12.34 CZR Score: +16.63

overvalued. p/b ratio

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Member Avatar phauenstein (99.35) Submitted: 2/12/2013 10:14:06 AM : Outperform Start Price: $6.65 CZR Score: +71.86

I honestly picked CZR shortly after hearing that Harrah's was finally taking it public. I am a huge fan of the Gaming industry and Gaming related stocks. Given the recent cut back on jobs and wages, although the DOW is back near 14,000, I think Gaming stocks still have a long, positive recovery until they get back to the high end of the stock price overall. Right now CZR is trading high on the news of online gambling and it will be interesting to see how it turns out. Personally, I don't own CZR stock at the moment, but do own LVS, MGM, and PENN. CZR was on my list to buy in the near future, but I likely won't buy in unless I can get it back under $10, preferably under $8.

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Member Avatar TulipSpeculator1 (88.61) Submitted: 8/15/2012 3:58:39 AM : Underperform Start Price: $8.00 CZR Score: -35.12

With their huge debt load small earnings the numbers just don't add up

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Member Avatar chopchop0 (51.10) Submitted: 2/14/2012 10:53:11 AM : Underperform Start Price: $12.20 CZR Score: +32.25

Loads of debt and late to the high-growth asian sector.

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Member Avatar Magnoliasteve (52.22) Submitted: 2/13/2012 9:09:29 PM : Underperform Start Price: $13.23 CZR Score: +40.94

Debt debt and DEBT

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Member Avatar XMFMT (96.77) Submitted: 2/13/2012 2:24:41 PM : Underperform Start Price: $14.34 CZR Score: +49.50

http://www.fool.com/investing/general/2012/02/13/millions-and-billions-of-problems-for-this-casino.aspx

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Member Avatar TrojanFan (24.04) Submitted: 2/8/2012 5:35:05 PM : Underperform Start Price: $15.18 CZR Score: +54.27

There is enormous additional float likely to hit the market when insiders invoke their right to sell in the near future.

Also, this offering was incredibly tiny and hardly serves as an accurate proxy for what the real valuation of the equity in this debt laden enterprise should be.

The debt load for this business is enormous.

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