Over the last six months, Caesars Entertainment’s shares have sunk to $30.37, producing a disappointing 18.8% loss while the S&P 500 was flat. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Is there a buying opportunity in Caesars Entertainment, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is Caesars Entertainment Not Exciting?

Even with the cheaper entry price, we don't have much confidence in Caesars Entertainment. Here are three reasons why you should be careful with CZR and a stock we'd rather own.

1. Revenue Growth Flatlining

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Caesars Entertainment’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years. Note that COVID hurt Caesars Entertainment’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.Caesars Entertainment Year-On-Year Revenue Growth

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Caesars Entertainment’s revenue to rise by 2.2%. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.

3. Short Cash Runway Exposes Shareholders to Potential Dilution

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Caesars Entertainment burned through $42 million of cash over the last year, and its $25.09 billion of debt exceeds the $986 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.Caesars Entertainment Net Debt Position

Unless the Caesars Entertainment’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Caesars Entertainment until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

Story Continues

Final Judgment

Caesars Entertainment’s business quality ultimately falls short of our standards. Following the recent decline, the stock trades at 1.7× forward EV-to-EBITDA (or $30.37 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. Let us point you toward the most dominant software business in the world.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

View Comments