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Caesars Entertainment Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Caesars Entertainment (NASDAQ: CZR  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Caesars Entertainment is well known in the U.S. gaming industry, but unlike most of its peers, it has missed out on the Asian growth explosion and had to deal with a far more challenging domestic market. Let's take an early look at what's been happening with Caesars Entertainment over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Caesars Entertainment

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$2.11 billion

Change From Year-Ago Revenue


Earnings Beats in Past 3 Quarters Since IPO


Source: Yahoo! Finance, S&P Capital IQ.

Will Caesars Entertainment win its big bet?
Analysts have gotten a lot less excited about Caesars' earnings over the past few months, widening their loss estimates by more than $0.30 per share for the just-ended quarter and by a full $1 per share for full-year 2013. But the stock has doubled just since mid-November on excitement about a potential brand-new lucrative opportunity for the casino company.

The big news for Caesars hit after the quarter ended, when New Jersey Governor Chris Christie said that he would be willing to allow Atlantic City casinos, which include both Caesars and Boyd Gaming (NYSE: BYD  ) , to implement online gaming for a decade-long trial period. In combination with some encouraging revenue figures from the Las Vegas Strip, which is a key area for Caesars, an entry into online gaming could give Caesars an inside track toward eventual nationwide legalization. Caesars is considering a potential spinoff of its online assets as well as the Planet Hollywood casino in Las Vegas, which would allow investors to tap into online potential directly.

But even discounting the fact that Caesars has missed out on the growth potential of Macau, domestic competition is hitting Caesars' high-debt operations hard. Las Vegas Sands (NYSE: LVS  ) has built a casino in Pennsylvania that is tapping Caesars' Atlantic City market, as it tries to reinvigorate its U.S. business after focusing so much of its attention lately on Macau, Singapore, and other international destinations. Also, both Penn National Gaming (NASDAQ: PENN  ) and Wynn Resorts (NASDAQ: WYNN  ) have made proposals to win Philadelphia's second casino license, which would both stoke domestic growth for the winner and draw even more gamblers away from Atlantic City.

In its earnings report, Caesars needs to show how a recent expensive debt offering will help it get through its tough financial times in the long run. For now, Caesars' balance sheet makes it a highly speculative play, even in the high-risk gaming industry.

Can Wynn win in Philly?
Most investors focus on Wynn's Macau operations, where the company has seen impressive growth. But new opportunities like Philadelphia have implications for Caesars and other domestic casino operators. Find out whether Wynn is a winning stock bet by reading our premium research report on the stock, tailored toward smart investors who need information to justify their buy and sell decisions. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

Click here to add Caesars Entertainment to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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