Is Caesars Entertainment Stock Underperforming the S&P 500?

Reno, Nevada-based Caesars Entertainment, Inc. (CZR) owns and operates as a gaming and hospitality company, offering casino, poker, roulette, and other gaming facilities and provides food and beverage services. Valued at $7 billion by market cap, the company owns, leases, or manages domestic properties in 18 states and utilizes its hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops, and other services to attract customers to its properties.

Companies worth $2 billion or more are generally described as “mid-cap stocks,” and CZR fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the resorts & casinos industry. Caesars has established a powerful brand that is recognized worldwide. The Caesars Rewards program sets them apart from competitors, while their prestigious properties in top tourist destinations attract a steady flow of customers. By investing in digital gaming and technology, the company is able to enhance customer interactions and streamline operations.

Despite its notable strength, CZR slipped 32.4% from its 52-week high of $48.57, achieved on Jan. 2. Over the past three months, CZR stock has declined 21.4%, considerably underperforming the S&P 500 Index’s ($SPX) 2.5% gains during the same time frame.

In the longer term, shares of CZR fell 17.4% over the past six months and dipped 30% over the past 52 weeks, significantly underperforming SPX’s six-month gains of 8.2% and solid 23.8% returns over the last year.

To confirm the bearish trend, CZR has been trading below its 50-day moving average since late October. It is trading below its 200-day moving average since early November, with slight fluctuations. 

CZR’s lower performance is due to challenges in the regional segment, such as increased competition and construction delays.

On Oct. 29, CZR shares closed down marginally after reporting its Q3 results. The company’s revenue was $2.87 billion, falling short of Wall Street forecasts of $2.91 billion. Its adjusted EBITDA stood at $1 billion, down 4% year over year. CZR reported a loss of $0.04 per share, missing Wall Street expectations of $0.21 in EPS.

In the competitive arena of resorts & casinos, MGM Resorts International (MGM) has taken the lead over CZR, showing resilience with 23.1% losses over the past 52 weeks. However, MGM lagged behind the stock with a 22.7% dip over the past six months. 

Wall Street analysts are moderately bullish on CZR’s prospects. The stock has a consensus “Moderate Buy” rating from the 16 analysts covering it, and the mean price target of $53.03 suggests a potential upside of 61.6% from current price levels.

On the date of publication,

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