Caesars Q4 Preview Falls Short of Wall Street Expectations

Posted on: January 18, 2024, 01:42h. 

Last updated on: January 18, 2024, 01:42h.

Caesars Entertainment (NASDAQ: CZR) provided a preliminary view of its fourth-quarter results, indicating a potential miss on analysts’ earnings before interest, taxes, depreciation, and amortization (EBITDA) and sales estimates. The operator is set to release its financial update for the December quarter on Feb. 20 after the close of US markets.

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Pedestrians walk the Las Vegas Strip near Caesars Entertainment’s Paris. The operator pre-announced fourth-quarter results that miss Wall Street forecasts. (Image: Bloomberg)

In its regulatory filing with the Securities and Exchange Commission (SEC), Harrah’s operator expects revenue of $2.815 billion to $2.835 billion for the December quarter, below the $2.89 billion Wall Street anticipated.  On the Las Vegas Strip, where Caesars is the second-largest operator, revenue is expected to be $1.088 billion to $1.094 billion, down from $1.154 billion a year earlier.

Caesars has also forecast a loss ranging from $4 million to $157 million, with EBITDA estimated to be $920 million to $940 million. Analysts had anticipated $957 million.

Notably, “Caesars has not finalized its financial statement closing process for the three months ended December 31, 2023. During this process, Caesars may identify items that would require it to make adjustments to the expected preliminary operating results,” according to the regulatory filing.

Caesars Las Vegas Ops Decent, But…

Caesars announced an increased Strip occupancy for the final quarter, but the operator may have missed out on the Las Vegas Grand Prix benefits as compared to rivals MGM Resorts International (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN). Caesars said its fourth-quarter table game drop decreased 1% while table hold fell to 21% from 23% a year prior.

Despite the disappointing fourth-quarter preview, some analysts favor Caesars. Stifel’s Steven Wieczynski reiterated a “buy” rating and $67 price target on the stock today.

Caesars iGaming Update

In the last three months of 2023, a rough November hurt Caesars Digital results. The operator said, “Sports betting hold was negatively impacted in the month of November and fell below our typical range. We estimate the negative impact of low sports betting hold in November to be approximately $44 million in net revenues, based on our typical hold range, and approximately $29 million of net income and Adjusted EBITDA.”

Wieczynski believes that Caesars management will eventually be able to wring value from the iGaming/sports betting unit.

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