Caesars Entertainment picked up support from the investment community Tuesday after posting a revised investor presentation showing its fiscal year cash flow guidance was in line with previous projections.
However, as the company said during its second quarter earnings call last month, it lowered expectations for full-year revenues from its Las Vegas resorts. The year-over-year increase will be between 2 percent and 4 percent, down from previous projections.
Caesars, which operates nine resorts on the Las Vegas Strip and nearly 50 gaming properties nationwide, filed the presentation with the Securities and Exchange Commission ahead of investor meetings in September.
Still, two analysts said the new projections presented Caesars, which completed a more than two-year bankruptcy reorganization 11 months ago, in more positive light.
“Overall, we believe the takeaways skew to the positive,” Macquarie Securities gaming analyst Chad Beynon wrote in a research report.
Deutsche Bank gaming analyst Carlo Santarelli told investors Caesars was “undervalued” and highlighted several favorable points about the company “that we believe will garner greater appreciation over time.”
Shares in Caesars, traded on the Nasdaq, are down 15 percent in the last three months. The company’s stock price took a 20 percent nosedive on August 1 during its second quarter conference call. Caesars executives took a cautious approach toward prospects in Las Vegas looking into the rest of the year, while reducing guidance toward future earnings and revenues based on weakness at its Las Vegas Strip resorts during July.
A week later, Caesars CEO Mark Frissora purchased $954,820 worth of the company’s stock in a vote of confidence for the company.
On Tuesday, Caesars stock price closed at $9.90, down 3 cents or 2.94 percent. Beynon thought Caesars was worth $15 a share and Santarelli placed a $14 per share value on the company.
The company warned its RevPar on the Strip would continue to be challenged. RevPar is the acronym for the non-traditional revenue-per-available-room metric used by Wall Street to measure profitability.
Santarelli said he wasn’t worried about RevPar projections and thought the company’s cash flow guidance on the Strip was “beatable.” He added that Caesars regional gaming properties – which account for 40 percent of the company’s cash flow – should continue to benefit from “stable domestic consumer trends and a mergers and acquisitions environment that not only provides higher floor valuations but has added further disciplines to the regional promotional environment.”
Beynon was also positive on Caesars’ regional properties “particularly as marketing costs continue to come down and revenues increase.” He forecasted the company’s regional cash flow would be 5 percent higher than consensus projections.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
