1-Star Stocks Poised to Plunge: Caesars?

Market-lagging returns could be written in this one star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Sep 19, 2012 at 12:00AM

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, casino operator Caesars Entertainment (Nasdaq: CZR) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Caesars and see what CAPS investors are saying about the stock right now.

Caesars facts

Headquarters (founded) Las Vegas (1937)
Market Cap $906.0 million
Industry Casinos and gaming
Trailing-12-Month Revenue $8.9 billion
Management Chairman/CEO Gary Loveman
President of Operations Thomas Jenkin
Return on Capital (average, past 3 years) 2.8%
Cash / Debt $985.1 million / $20.3 billion
Competitors Boyd Gaming
MGM Resorts International
Trump Entertainment Resorts

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 77% of the 62 members who have rated Caesars believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, Allstar13913, succinctly summed up the bear case for our community:

Caesars currently has high debt levels and no clear way to pay off its debt. As a regional casino operator, it has no footprint in Asia and an inability to attract big customers. Management seems to be incompetent and is looking to expand operations in [Massachusetts] rather than pay down debt that is out-stripping revenues. This was a horrible IPO that was foisted on the investing public.

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