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Why Shares of Eldorado Resorts Are Rolling 11% Higher Today

By Rich Duprey - May 12, 2020 at 11:56AM

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Revenue fell, but earnings beat analysts' expectations.

What happened

Shares of Eldorado Resorts (ERI) jumped 11% in morning trading Tuesday. The upward move comes despite the company's report the day before that first-quarter revenue tumbled 26% while Caesars Entertainment (CZR), which Eldorado will be acquiring for $17 billion, saw a 14% drop.

So what

While gambling revenue fell as a result of the COVID-19 pandemic forcing the closure of casinos beginning in mid-March, the company's $0.11 per share in adjusted earnings actually beat analyst expectations of $0.09 per share.

A pair of dice

Image source: Getty Images.

Now what

Investors are still counting on states reopening for business to help mitigate the impact closing has had on casino operations. Eldorado's geographic diversity ought to help it rebound faster than some other players, particularly major resort operators like MGM Resorts (MGM -2.09%), that derive half of their revenue from the Las Vegas Strip.

Having also partnered with sportsbook William Hill, Eldorado should be able to benefit from the growth of sports betting, though with professional sports leagues on hiatus, that opportunity remains in the future.

Caesars Entertainment also reported lower revenue, missing Wall Street estimates. But with plans to reopen its resorts as soon as permitted, its shares are also 5% higher today.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Eldorado Resorts, Inc. Stock Quote
Eldorado Resorts, Inc.
MGM Resorts International Stock Quote
MGM Resorts International
$34.71 (-2.09%) $0.74
Caesars Entertainment Corporation Stock Quote
Caesars Entertainment Corporation
William Hill plc Stock Quote
William Hill plc

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