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Caesars Entertainment (CZR) Rides on Robust Occupancy & ADR

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Caesars Entertainment, Inc. (CZR - Free Report) is benefiting from an increased occupancy rate and property developments. The Las Vegas segment, in 2022, witnessed pre-COVID values, driven by a strong ADR, higher room nights and increased banquet revenues.

Recently, Caesars Entertainment reported impressive fourth-quarter 2022 results wherein the earnings (adjusted loss) and revenues surpassed the Zacks Consensus Estimate by 38.9% and 0.1%, respectively.  Earnings and revenues increased year over year by 90.4% and 8.9%, respectively. The uptrend was backed by higher revenue contributions from the Las Vegas segment along with the divestiture of William Hill International business. The digital initiative, Liberty, as well as property development, bodes well for the company.

Shares of CZR have gained 22.9% over the past six months, compared with the Zacks Leisure and Recreation Services industry’s growth of 6.7%. Earnings estimates for 2023 have moved north to $1.15 per share from 93 cents over the past 30 days, depicting analysts' optimism over the company's growth prospects.

Zacks Investment Research
Image Source: Zacks Investment Research

Let us discuss the driving factors broadly.

Tailwinds

Caesars Entertainment is witnessing occupancy rates up to the level of the year 2019, that is pre-COVID. The Las Vegas segment of the company portrayed higher revenues due to strong ADRs, higher room nights and increased banquet revenues. In 2022, its occupancy reached 92.2%. The company anticipates the uptrend to continue in 2023 and beyond.

The company’s investment in new projects and the renovations of existing projects bode well. During the fourth quarter of 2022, the company stated progress with respect to the construction of its new hotel tower and additional entities at the New Orleans property along with room remodel program in Atlantic City, which will be completed ahead of the peak summer season in 2023. The land-based Horseshoe Lake Charles property opened in fourth-quarter 2022, resulting in better-than-expected results after opening. The expansion of its casino offering in Pompano and Harrah's Hoosier Park is anticipated in 2023. Also, the company anticipates the temporary casinos in Caesars Danville (in Virginia) and Harrahs' Columbus (in Nebraska) to open by mid-year 2023.

On Jul 1, 2022, the company closed the sale of the William Hill International business and utilized $730 million of the net proceeds toward the reduction of its debt. The company stated that it is focused on driving digital business through buyouts, especially in new markets, including New York and Louisiana. Also, the company’s digital initiative, Liberty, is gaining recognition across its markets. As of Dec 31, 2022, Caesar Sportsbook app’s 20 mobile sports betting jurisdiction was powered by the Liberty tech platform. The initiative is likely to boost customer experience in the upcoming periods.

Zacks Rank & Other Key Picks

CZR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are some other top-ranked stocks that investors may consider in the Zacks Consumer Discretionary sector.

Wynn Resorts, Limited (WYNN - Free Report) currently has a Zacks Rank #1. WYNN has a trailing four-quarter earnings surprise of 0.6% on average. Shares of the company have gained 59.6% in the past six months.

The Zacks Consensus Estimate for WYNN’s 2023 sales and EPS suggests growth of 42% and 119.5%, respectively, from the year-ago levels.

Ralph Lauren Corporation (RL - Free Report) currently sports a Zacks Rank #1. RL delivered a trailing four-quarter earnings surprise of 23.6% on average. Its shares have rallied 24.9% in the past six months.

The Zacks Consensus Estimate for RL’s fiscal 2024 sales and EPS suggests growth of 5.5% and 14%, respectively, from the year-ago levels.

InterContinental Hotels Group PLC (IHG - Free Report) currently carries a Zacks Rank #2 (Buy). Shares of IHG have gained 27.2% in the past six months. The long-term earnings growth rate of the company is 13.6%.

The Zacks Consensus Estimate for IHG’s 2023 sales and EPS suggests growth of 9.8% and 18.4%, respectively, from the year-ago period’s reported levels.

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