Credit Suisse rates Caesars’ chances high in regional gaming markets

Credit Suisse’s Cameron McKnight studied the position and performance of US casino operator Caesars Entertainment Corporation, which rose from bankruptcy in 2017, and concluded that company is in the best position to dominate the Las Vegas Strip as well as the regional gaming markets.

Caesars has eight Las Vegas properties that account for 55 per cent of total EBITDA.

The company focuses on renovating and reinvigorating “long-neglected” assets and focusing on prime center-Strip locations has resulted in market share gains in the region, the analyst said. The momentum expected to continue into 2020, a new convention space should drive incremental corporate bookings and share, he said.

The regional market accounts for the remaining 45 per cent of total EBITDA, and the segment is “steady as she goes,” with revenues growing at a low-single-digit rate, McKnight said. A steady and growing market has given the company an opportunity to significantly decrease its marketing spend from $994 million in the first half of 2017 to $907 million in the first half of 2018, a notable source of margin growth, he said.

Caesars’ strong position in Las Vegas and regional markets should help it generate a 7.5-per cent EBITDA compounded annual growth rate through 2020, and the company can outperform rivals in both markets, according to Credit Suisse. The stock’s discount to peers at 8 times 2019 EBITDA makes the stock an attractive investment, in the firm’s view.

Source: benzinga.com