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Robust Demand Aid Caesars Entertainment (CZR), High Cost Ail
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Caesars Entertainment, Inc. (CZR - Free Report) is riding high on pent-up consumer demand, improving occupancy and strategic initiatives. In the past six months, the stock has increased 17% compared with the industry’s gain of 24.3%. Despite the aforementioned efforts, the stock has underperformed the industry as high costs and weather disruptions are hurting CZR.
Growth Catalysts
Our model predicts the company’s sales and earnings to increase 6.4% and 131.7% year over year, respectively.
Caesars Entertainment continues to benefit from robust occupancy. During first-quarter 2023, occupancy in Las Vegas reached 95%. The upside was primarily driven by strong leisure, group and convention demand. CZR revealed that it began witnessing the pre-COVID return of conventions and groups to Las Vegas.
The company is optimistic about booking trends as it is witnessing increased bookings for group and convention room nights. It expects the return of the group and convention business and entertainment offerings to drive incremental demand in the Las Vegas market. In 2023, our model expects revenues from Las Vegas operations to rise 7.7% year over year.
CZR is gaining from increased focus on digital efforts. During the first quarter of 2023, it emphasized certain tech enhancements to boost product offering and drive better customer engagement. This includes a new standalone iCasino app (expected to launch during third-quarter 2023), testing of its in-house player account management system and migration of sports betting operations in Nevada to its Liberty tech stack (ahead of the 2023 football season). Caesars Entertainment emphasizes product enhancements, including cash-out speed, customer service, parlay and alternative line offerings to drive growth.
Caesars Entertainment also focuses on sports betting expansion to drive growth. To this end, it formed a new Caesars Digital segment comprising sports betting, iGaming and poker. It integrated its digital offerings with Caesars Rewards at online and physical casinos.
During first-quarter 2023, Caesars Digital began operations in Massachusetts and Ohio. As of Mar 31, 2023, the company operated sports betting in 30 jurisdictions in North America, 22 of which are mobile. Also, it stated the availability of iGaming offerings in five jurisdictions.
The Zacks Rank #3 (Hold) company is inclined on expanding in new markets to drive growth. It announced partnership with Eastern Band of Cherokee Indians to build and develop Caesars Virginia. Estimated at a budget of $650 million, the property will include a resort casino along with a 500-room hotel, casino floor, Caesars Sportsbook, a live entertainment theater and 40,000 square feet of meeting and convention space.
Hurdles
An increase in operating expenses is likely to impact CZR’s profit negatively. During first quarter, food and beverage expenses were $251 million compared with $202 million reported in the prior-year quarter. Hotel expenses were $137 million compared with $115 million reported in the year-ago quarter.
CZR has been witnessing constant disruptions associated with weather as well as construction. During first-quarter 2023, the regional segment was negatively impacted by severe winter weather, particularly in northern Nevada. It reported reduced visitation in Lake Tahoe and Reno properties on account of significant snowfall and unsafe travel conditions.
Royal Caribbean Cruises has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 142.8% in the past year.
The Zacks Consensus Estimate for Royal Caribbean Cruises’ 2023 sales and EPS indicates rises of 48.5% and 162.9%, respectively, from the year-ago period’s levels.
Trip.com Group has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 39.5% in the past year.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS implies increases of 102.2% and 334.5%, respectively, from the year-ago period’s levels.
Bluegreen Vacations has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of BVH have increased 28.3% in the past year.
The Zacks Consensus Estimate for Bluegreen Vacations’ 2023 sales and EPS suggests improvements of 3.6% and 17.6%, respectively, from the year-ago period’s levels.
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Robust Demand Aid Caesars Entertainment (CZR), High Cost Ail
Caesars Entertainment, Inc. (CZR - Free Report) is riding high on pent-up consumer demand, improving occupancy and strategic initiatives. In the past six months, the stock has increased 17% compared with the industry’s gain of 24.3%. Despite the aforementioned efforts, the stock has underperformed the industry as high costs and weather disruptions are hurting CZR.
Growth Catalysts
Our model predicts the company’s sales and earnings to increase 6.4% and 131.7% year over year, respectively.
Caesars Entertainment continues to benefit from robust occupancy. During first-quarter 2023, occupancy in Las Vegas reached 95%. The upside was primarily driven by strong leisure, group and convention demand. CZR revealed that it began witnessing the pre-COVID return of conventions and groups to Las Vegas.
The company is optimistic about booking trends as it is witnessing increased bookings for group and convention room nights. It expects the return of the group and convention business and entertainment offerings to drive incremental demand in the Las Vegas market. In 2023, our model expects revenues from Las Vegas operations to rise 7.7% year over year.
CZR is gaining from increased focus on digital efforts. During the first quarter of 2023, it emphasized certain tech enhancements to boost product offering and drive better customer engagement. This includes a new standalone iCasino app (expected to launch during third-quarter 2023), testing of its in-house player account management system and migration of sports betting operations in Nevada to its Liberty tech stack (ahead of the 2023 football season). Caesars Entertainment emphasizes product enhancements, including cash-out speed, customer service, parlay and alternative line offerings to drive growth.
Caesars Entertainment also focuses on sports betting expansion to drive growth. To this end, it formed a new Caesars Digital segment comprising sports betting, iGaming and poker. It integrated its digital offerings with Caesars Rewards at online and physical casinos.
During first-quarter 2023, Caesars Digital began operations in Massachusetts and Ohio. As of Mar 31, 2023, the company operated sports betting in 30 jurisdictions in North America, 22 of which are mobile. Also, it stated the availability of iGaming offerings in five jurisdictions.
The Zacks Rank #3 (Hold) company is inclined on expanding in new markets to drive growth. It announced partnership with Eastern Band of Cherokee Indians to build and develop Caesars Virginia. Estimated at a budget of $650 million, the property will include a resort casino along with a 500-room hotel, casino floor, Caesars Sportsbook, a live entertainment theater and 40,000 square feet of meeting and convention space.
Hurdles
An increase in operating expenses is likely to impact CZR’s profit negatively. During first quarter, food and beverage expenses were $251 million compared with $202 million reported in the prior-year quarter. Hotel expenses were $137 million compared with $115 million reported in the year-ago quarter.
CZR has been witnessing constant disruptions associated with weather as well as construction. During first-quarter 2023, the regional segment was negatively impacted by severe winter weather, particularly in northern Nevada. It reported reduced visitation in Lake Tahoe and Reno properties on account of significant snowfall and unsafe travel conditions.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Royal Caribbean Cruises Ltd. (RCL - Free Report) , Trip.com Group Limited (TCOM - Free Report) and Bluegreen Vacations Holding Corporation , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 142.8% in the past year.
The Zacks Consensus Estimate for Royal Caribbean Cruises’ 2023 sales and EPS indicates rises of 48.5% and 162.9%, respectively, from the year-ago period’s levels.
Trip.com Group has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 39.5% in the past year.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS implies increases of 102.2% and 334.5%, respectively, from the year-ago period’s levels.
Bluegreen Vacations has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of BVH have increased 28.3% in the past year.
The Zacks Consensus Estimate for Bluegreen Vacations’ 2023 sales and EPS suggests improvements of 3.6% and 17.6%, respectively, from the year-ago period’s levels.