Shares of Caesars Entertainment (Nasdaq: CZR) hit a 52-week low yesterday. Let's look at how it got here and whether clouds are ahead.

How it got here
With the economy struggling, it should come as no surprise that gaming stocks are having a rough go of it in recent months. The hardest hit has been Caesars Entertainment, which has fallen 42% since reaching the public markets.

The explanation is simple. Caesars is extremely leveraged by its $20 billion debt load and it needs the economy, and by extension U.S. gaming, to grow quickly to become a winner for investors. Since neither is happening at anything more than a snail's pace, the stock continues to fall.

As you can see below, the stock has lagged competitors since coming public, but all gaming stocks are down since then. The three top performers -- Melco Crown (Nasdaq: MPEL), Las Vegas Sands (NYSE: LVS), and Wynn Resorts (Nasdaq: WYNN) -- all get most of their revenue from Asia, where gaming is growing quickly. MGM Resorts (NYSE: MGM) has struggled as well in the same U.S. markets as Caesars.

CZR Chart

CZR data by YCharts

The sheer debt load and anemic growth rate should be enough to scare any investor off, or at least to a better gaming stock. Based on the data below, any of the other four competitors would be a better buy than Caesars based on growth and debt/market equity.

Company

Market Cap

Total Debt

EBITDA (TTM)

Quarterly Revenue Growth

Caesars Entertainment $1.12 billion $20.3 billion $1.9 billion 4.3%
Las Vegas Sands $30.2 billion $9.9 billion $3.5 billion 30.8%
MGM Resorts $4.8 billion $13.4 billion $1.7 billion 54%*
Wynn Resorts $10.8 billion $5.5 billion $1.4 billion 4.2%
Melco Crown $5.6 billion $2.3 billion $910 million 27.3%

Source: Yahoo! Finance. *MGM Resorts' revenue growth includes MGM China.

What's next?
So has Caesars finally fallen so far that the odds are in our favor? Management has pushed out debt maturities so bankruptcy isn't a worry short-term, and for some reason debtors are more than willing to give the company cash anytime it asks. So I don't see the stock going to zero, but I don't see it outperforming rivals and it will likely keep falling if the economy continues to struggle.

The one thing that could change that is an online gaming bill in the U.S. The market potential is huge and Caesars would have a leg up on the competition if it passed. Outside of this happening, I think it's a long road to ruin for Caesars.

The CAPS community is also bearish, giving the stock a one-star rating out of five. The stock only has 10 outperform calls to 51 underperform calls right now.

Interested in reading more about Caesars Entertainment? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

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