NEW YORK (TheStreet) -- Shares of Caesars Entertainment Corp. (CZR) are surging, up 15.10% to $16.54 in pre-market trade, after it was reported that the highly indebted gaming company presented a plan to creditors that would restructure the obligations of its biggest unit by turning it into a real estate investment trust, according to Bloomberg.
The proposal would convert Caesars Entertainment Operating Co. into a property company that owns its casinos and a unit that would manage them, according to a regulatory filing today. Caesars said it remains in talks with creditors and that the blueprint is "outdated," Bloomberg reports.
Caesars is trying to wrangle the support of dozens of creditors holding $18.4 billion of debt to try to push through a pre-arranged bankruptcy plan. The casino operator, taken private for $30.7 billion by Apollo Global Management LLC and TPG Capital in 2008, has lost money every year since 2009 and struggled to meet its debt payments, Bloomberg noted.
The Las Vegas-based company was forced to reveal its proposal after lender Silver Point Capital LP exited restructuring talks, becoming at least the second to do so in the last month, sources told Bloomberg.
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 and generally disappointing historical performance in the stock itself."
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 decreased by 19.3% when compared to the same quarter one year ago, dropping from -$761.20 million to -$908.10 million.
- CZR has underperformed the S&P 500 Index, declining 15.90% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for CAESARS ENTERTAINMENT CORP is rather high; currently it is at 50.32%. 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 -41.04% significantly underperformed when compared to the industry average.
- CAESARS ENTERTAINMENT CORP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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 (-$9.58 versus -$21.99).
- The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 1.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- You can view the full analysis from the report here: CZR Ratings Report