Investors in Caesars Entertainment, Inc. (NASDAQ:CZR) had a good week, as its shares rose 8.1% to close at US$106 following the release of its quarterly results. Revenues came in at US$1.7b, in line with expectations, while statutory losses per share were substantially higher than expected, at US$2.03 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 14 analysts covering Caesars Entertainment are now predicting revenues of US$8.88b in 2021. If met, this would reflect a substantial 89% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 80% to US$2.53. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$8.22b and losses of US$4.70 per share in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable decrease in loss per share in particular.
It will come as no surprise to learn thatthe analysts have increased their price target for Caesars Entertainment 17% to US$120on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Caesars Entertainment at US$135 per share, while the most bearish prices it at US$90.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Caesars Entertainment's growth to accelerate, with the forecast 134% annualised growth to the end of 2021 ranking favourably alongside historical growth of 30% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 23% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Caesars Entertainment is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Caesars Entertainment going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Caesars Entertainment (1 is concerning!) that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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