CZR

Caesars Entertainment Corp

Consumer


Presented:01/19/2017
Price:$8.95
Cap:$1.32B
Current Price:$45.01
Cap:$9.74B

Presented

Date01/19/2017
Price$8.95
Market Cap$1.32B
Ent Value$6.45B
P/E RatioN/A
Book ValueN/A
Div Yield0%
Shares O/S146.96M
Ave Daily Vol908,864
Short IntN/A

Current

Price$45.01
Market Cap$9.74B
Caesars Entertainment Corp. is a diversified casino-entertainment company. The company operates its business through its wholly owned subsidiary, Caesars Entertainment Operating Company, Inc. It owns an online gaming business, which provides real money casino, bingo and poker games in the United Kingdom, and has alliances with online gaming providers in Italy and France. The company's resorts operate primarily under the Caesars, Harrah's and Horseshoe brand names. Caesars Entertainment was founded by William Fisk Harrah in 1937 and is headquartered in Las Vegas, NV.

Publicly traded companies mentioned herein: Caesars Entertainment Corp (CZR), Las Vegas Sands Corp (LVS), Wynn Resorts, Limited (WYNN)

Highlights

Caesars is at the conclusion of a two-year bankruptcy process, and on January 17, 2017 the US Bankruptcy Court (for the Northern District of Illinois) approved the reorganization plan. The presenter is long shares of Caesars via CZR and believes the remainder of the process will take roughly two-to-three months (at which point CZR’s liquidity should improve and the stock should trade higher as investors get more comfortable with the new, simplified structure). With the stock trading at $8.80 today, the risk/ reward is favorable because CZR is undervalued both relative to its peers and potential earnings power. He is also bullish on the Las Vegas market, and given Caesars’ favorable mix of Las Vegas and regional gaming assets he sees the potential for the market to award a higher multiple to the stock (i.e., 9x EBITDA versus 8x today). Additionally, CZR should have a meaningful FCF tailwind and if his model is accurate the FCF yield in 2019 will be 13-14%, which is “too high” (7-8% is his target range). On an EBITDA multiple basis alone, the stock is more fairly valued at $11, and based on FCF yield shares could see $14-15.

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Idea Discussion

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