Why Caesars Entertainment's Shares Popped Temporarily

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Caesars Entertainment (Nasdaq: CZR  ) jumped 11% at the open of trading today after at least one big investor bought into the company's recent earnings report. As trading continued, shares settled into low single-digit gains.

So what: The third-quarter results were a classic case of "less bad" results. Net revenue rose slightly to $2.2 billion and the bottom-line loss tripled to $505.5 million, or $4.03 per share. But this number includes $419 million of impairment charges, so if we back that out, the loss improved to $86.5 million. This isn't exactly good, but it's an improvement for Caesars.  

Now what: The results for Caesars show some improvement in bottom-line results because of improved cost controls, but this still doesn't make this stock a buy. The company has $20.8 billion of long-term debt and isn't generating enough EBITDA (a proxy for cash flow) to pay for this debt. As a result, debt continues to grow and the stock becomes less attractive. I would sell on any bounce and would avoid this stock at all costs.

Interested in more info on Caesars Entertainment? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On November 02, 2012, at 4:51 AM, NASDAQCZAR wrote:

    WRONG CZR is doing CZR is Upgraded Target $200-$250 as online gaming will add billions as well Liquidity is $2.2 Billion in cash, you don't know what you-re talking about period stop writing these useless articles, the new casinos in Ohio Cleveland open and generating new revenues, and Cincinnati to open in 2013 will add more revenues, they are refinancing their debt pushed out to 2018 no debt is due until 2015 and by then the rest of the new casinos will come online, they are selling golf course in macau and online gaming will be a boom for them they have more than enough cash on hand and traffic levels are back to 2008 levels. Suffolk Downs $1 billion project is underway to be built CZR owns the best gaming brands Showboat, Ballys and Harrahs and Caesars plus the Horseshoe. All the new casinos will be open and generating income before any debt is due and that will be refinanced at lower rates and pushed out to 2018 or longer you are a fool writing these dumb articles STOP IT!!

  • Report this Comment On November 02, 2012, at 4:56 AM, NASDAQCZAR wrote:

    WRONG CZR is doing well

    CZR is Upgraded to Strong BUY Target $200-$250 as online gaming will add billions as more people will play and bet that can trust their websites confidence in Caesars websites will be a boom once regulated and taxed, trust in CZR online brands will be important for online gaming.

    Liquidity is $2.2 Billion in cash

    You don't know what you-re talking about period stop writing these useless articles, the new casinos in Ohio Cleveland open and generating new revenues, and Cincinnati to open in 2013 will add more revenues, they are refinancing their debt pushed out to 2018 no debt is due until 2015 and by then the rest of the new casinos will come online, they are selling golf course in macau and online gaming will be a boom for them they have more than enough cash on hand and traffic levels are back to 2008 levels. Suffolk Downs $1 billion project is underway to be built CZR owns the best gaming brands Showboat, Ballys and Harrahs and Caesars plus the Horseshoe. All the new casinos will be open and generating income before any debt is due and that will be refinanced at lower rates and pushed out to 2018 or longer

    You are a true fool in every sense of the word not a motley fool but a real fool for writing these dumb and ignorant articles STOP IT!!

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