NEW YORK (TheStreet) -- Shares of Caesars Entertainment Corp. (CZR) are down -2.22% to $18.06 on heavy trading volume after it was reported that an investor group filed a notice of default against a unit of the casino entertainment company, which has $23.4 billion in debt, according to Bloomberg.
The bondholders, including Appaloosa Management LP and Oaktree Capital Group LLC (OAK), own 30% Caesars Entertainment Operating Co. second-lien, 10 percent bonds due in 2018, sources said.
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 several 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, weak operating cash flow 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 77.6% when compared to the same quarter one year ago, falling from -$217.60 million to -$386.40 million.
- Net operating cash flow has significantly decreased to -$94.50 million or 104.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 (-$6.45 versus -$22.05).
- 49.11% is the gross profit margin for CAESARS ENTERTAINMENT CORP which we consider to be strong. Regardless of CZR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CZR's net profit margin of -18.38% significantly underperformed when compared to the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: CZR Ratings Report