+ Watch CZR
on My Watchlist
Super bad fundamentals
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.
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.
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 -_- )fPrice/Book : 53.80 (<-- that is an absolutely ridiculous value by the way)Price/Sales: 0.21The 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/CZRHowever, 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-statementThe 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/2641772At 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
new jersey should be a bonanza for them
overvalued. p/b ratio
It's on its way back down after a bubble pop/ short run on the stock from the New Jersey gaming law.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.
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.
With their huge debt load small earnings the numbers just don't add up
Loads of debt and late to the high-growth asian sector.
Debt debt and DEBT
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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