Caesars Previews Q4 Results, Likely to Miss EBITDA, Revenue Estimates

Posted on: January 18, 2024, 01:42h. 

Last updated on: January 19, 2024, 11:33h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Caesars Entertainment (NASDAQ: CZR) delivered a preliminary view of its fourth-quarter results to investors on Thursday, and it appears the company will likely miss analysts’ earnings before interest, taxes, depreciation, and amortization (EBITDA), and sales estimates.

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

In a Form 8-K filing with the Securities and Exchange Commission (SEC), the Harrah’s operator said it expects revenue of $2.815 billion to $2.835 billion for the December quarter, well below the $2.89 billion Wall Street expected. 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.

The gaming company’s fourth-quarter loss is forecast to range from $4 million to $157 million with EBITDA estimated to be $920 million to $940 million. Analysts expected $957 million.

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. “In addition to its routine closing procedures, Caesars has not completed its annual tax provision or reached its final conclusions related to the assumptions used in determining the estimated fair value of its indefinite lived intangible assets and reporting units associated with goodwill.”

The gaming company is scheduled to deliver its financial update for the December quarter on February 20 after the close of US markets.

Caesars Las Vegas Ops Decent, But …

Caesars said its Strip occupancy for the final three months of 2023 jumped to 97.9% from 95.5% a year earlier. That figure likely would have been better if not for the loss of 65K room nights because of construction at Caesars Palace and Paris.

On the other hand, there are some indications that the operator didn’t reap Las Vegas Grand Prix benefits on par with 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, Caesars is favored by some analysts. Stifel’s Steven Wieczynski reiterated a “buy” rating and $67 price target on the stock today.

“With CZR, you get what we believe is the best management team in gaming and a company that should produce significant free cash flow in any normalized environment,” observed the analyst. “We believe the company can delever (sic) their balance sheet, which should, in turn, bring longer-term investors into this story.”

Caesars iGaming Update

In what’s becoming a familiar refrain across the sports wagering industry, a rough November appears to have dented results for Caesars Digital in the last three months of 2023.

Caesars Digital net revenues, net income (loss), and Adjusted EBITDA during the fourth quarter reflected improved sports betting and iGaming handle as compared to the same prior year period,” said the operator in the SEC filing. “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 added that he’s confident Caesars management will eventually be able to wring value from the iGaming/sports betting unit.