NEW YORK (TheStreet) -- Shares of Caesars Entertainment (CZR - Get Report) are up 3.56% to $13.80 on heavy trading volume after it was reported that the casino entertainment company reached a deal with the trustee of first-lien bonds that would facilitate negotiations with holders of those notes because it provides incentive to delay a potential notice of default, Bloomberg reports.
The company announced a waiver agreement with UMB Financial Corp. (UMBF - Get Report), which was named the trustee of almost $5 billion of first-lien bonds on July 30, that’s aimed at keeping those noteholders engaged in discussions, according to a regulatory filing today.
The agreement may discourage bondholders from alleging a default until September 19 because any notice filed on that date or later would only give the Las Vegas-based company 10 days to comply with its credit pact, according to the filing.
Ordinarily, Caesars would have 60 days to address a violation, so the deal would give it less time before creditors can expedite claims, Bloomberg said.
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TheStreet Ratings team rates CAESARS ENTERTAINMENT CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CAESARS ENTERTAINMENT CORP (CZR) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 119.5% when compared to the same quarter one year ago, falling from -$212.50 million to -$466.40 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 81.06% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- CAESARS ENTERTAINMENT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CAESARS ENTERTAINMENT CORP reported poor results of -$22.05 versus -$11.12 in the prior year. This year, the market expects an improvement in earnings (-$4.70 versus -$22.05).
- The gross profit margin for CAESARS ENTERTAINMENT CORP is rather high; currently it is at 50.95%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -21.34% is in-line with the industry average.
- CZR's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- You can view the full analysis from the report here: CZR Ratings Report
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