Shares of Eldorado Resorts (NASDAQ: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 (NASDAQ:CZR), which Eldorado will be acquiring for $17 billion, saw a 14% drop.
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.
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 (NYSE:MGM), 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.