Will Caesars Entertainment (CZR) Stock Be Helped By Restructuring Talks With Creditors?

NEW YORK (TheStreet) -- Caesars Entertainment Corp. (CZR) will start confidential talks with some of its senior creditors to restructure its $24.2 billion of long-term debt, Bloomberg reports.

The company is "committed to working constructively with creditors to deleverage" its most indebted unit "and create a path toward a sustainable capital structure," said CEO Gary Loveman in a statement.

Bondholders that have signed non-disclosure agreements, which give them access to private information to facilitate discussions, include holders of the $2.1 billion of 11.25% first-lien notes due 2017, $1.25 billion of 8.5% first-lien securities due 2020 and $1.5 billion of 9% first-lien bonds due 2020, according to the statement.

 

Shares of Caesars Entertainment are down 1.58% to $12.45.

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 some concerns, 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, 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 119.8% when compared to the same quarter one year ago, falling from -$212.20 million to -$466.40 million.
  • Net operating cash flow has significantly decreased to -$298.80 million or 2773.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.05%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 85.45% 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 -$21.99 versus -$11.12 in the prior year. This year, the market expects an improvement in earnings (-$8.53 versus -$21.99).
  • 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.
  • You can view the full analysis from the report here: CZR Ratings Report
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