Caesars Entertainment (NASDAQ:CZR) investors are sitting on a loss of 65% if they invested three years ago

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the last three years have been particularly tough on longer term Caesars Entertainment, Inc. (NASDAQ:CZR) shareholders. So they might be feeling emotional about the 65% share price collapse, in that time. And the ride hasn’t got any smoother in recent times over the last year, with the price 29% lower in that time. Furthermore, it’s down 21% in about a quarter. That’s not much fun for holders.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.

View our latest analysis for Caesars Entertainment

Because Caesars Entertainment made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over three years, Caesars Entertainment grew revenue at 7.5% per year. That’s not a very high growth rate considering it doesn’t make profits. It’s likely this weak growth has contributed to an annualised return of 18% for the last three years. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). After all, growing a business isn’t easy, and the process will not always be smooth.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So we recommend checking out this free report showing consensus forecasts

Investors in Caesars Entertainment had a tough year, with a total loss of 29%, against a market gain of about 26%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.

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