Published on: October 7, 2025, at 04:54h.

Updated on: October 7, 2025, at 04:54h.

• Caesars Entertainment’s stock has faced significant declines this year, with a troubling start to Q4.
• Morningstar highlights the shares as undervalued and recommends them for the fourth quarter.

As Las Vegas Strip foot traffic continues to decline, Caesars Entertainment (NASDAQ: CZR) has seen its stock price tumble by 26.24% year-to-date. The situation for this gaming stock appears dire, prompting concerns that it could revisit its April “Liberation Day” lows if selling pressure persists.

Despite these negative trends, certain analysts maintain a positive outlook for the operator of Harrah’s. According to Morningstar, Caesars is among 33 “undervalued” stocks that investors should keep on their radar for Q4. However, it should be noted that Caesars has had a rocky start to the last quarter of 2025, illustrated by an 8.79% drop just over the past week.

“Consumer cyclical stocks have lagged behind the market in 2025. The sector began the fourth quarter trading 8% higher than our fair value estimate. Approximately 40% of the securities we monitor are rated in the 4- and 5-star categories,” stated Erin Lash, Morningstar’s sector director.

Caesars stands out as one of just three consumer discretionary stocks highlighted by the research firm for its fourth-quarter undervaluation, being the sole representative from the gaming sector.

Challenges Facing Caesars Stock

As extensively reported, both gross gaming revenue (GGR) and visitor numbers in Las Vegas have declined this year—a concerning trend for Caesars, the second-largest operator on the Strip. But the challenges don’t stop there.

Recently, the company’s position in the online sports betting realm has faced scrutiny with the rise of prediction markets. While Caesars benefits from its terrestrial casinos—unlike standalone sportsbook operators—the stock has been affected by the negative sentiment prevailing in the market, especially as reports indicate increased football betting activity on Kalshi.

These developments are significant for Caesars and its investors, as the company’s digital division, which covers online sports betting, has been progressing. It is also viewed as a valuable asset with potential for spin-offs, which could significantly aid in alleviating the company’s debt. However, with the sports betting sector experiencing distress, Caesars may need to retain its online operations within the company for the time being.

Considering Caesars Stock as a Valuable Investment

Despite the challenges mentioned, some financial experts see potential value in Caesars stock. Morningstar’s Lash describes the stock as “an attractive investment opportunity,” pointing out that it is currently trading at a considerable discount compared to the research firm’s fair value estimate of $61—approximately 2.5 times the stock’s current closing price.

Debt reduction plays a vital role in the long-term narrative for Caesars. Lash predicts a notable decrease in the operator’s debt relative to earnings before interest, taxes, depreciation, and amortization (EBITDA) over the coming years.

“Management has historically focused on generating cash flow through strategic partnerships to reduce debt, rather than prioritizing shareholder value through dividends or stock buybacks,” the analyst concludes. “We expect this approach to continue, forecasting that the debt-to-adjusted EBITDA ratio will decline to around 4 times (from our estimate of 6.4 times in 2025) in the upcoming years.”