Ceasars Entertainment Stock Is Rising but Is Now the Time to Buy?

NEW YORK (TheStreet) -- Caesars Entertainment (CZR) shares added 3.5% to their value in the past week but is this recent rally any indication it's time to consider getting back to Vegas with this company? The short answer is no, let's see why.

Despite the recent stock recovery, Caesars' shares are still down 36% since the beginning of the year. Even after accounting for the huge drop in its value, the company's enterprise value-to-EBITDA ratio is still relatively high at 14.3. In comparison, other leading sector companies such as Wynn Resorts (WYNN) and Las Vegas Sands (LVS) have a lower ratio of 13.8 and 12.4, respectively.

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The average hotel/gaming sector company has a ratio of 14.18. This means Caesars' current valuation is not only higher than its peers but also above the sector's average.

Caesars is concentrated in North America, while Wynn and Las Vegas Sands have proprieties in Asia including Macau which continue to provide potential operating growth.

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Alas, the current high valuation isn't the only issue. Caesars still has huge debt at $21.1 billion and a $3.5 billion deficit in its equity.

Moreover, Caesars is showing very modest revenue gains. In the second quarter, revenue rose by 3%, year over year. Despite this modest increase in revenue, its diluted loss per share reached $3.24 -- a $1.55 per share increase in its loss compared to the same quarter last year.

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