Caesars CEO Reeg Affirms Absence of Involvement with Penn, Focuses on Stock Repurchases
Caesars Entertainment (NASDAQ: CZR) is making headlines once again, with CEO Tom Reeg leading the charge. Here's a rundown of the latest developments surrounding the gaming giant.
No Quarterly Dividends and Share Buybacks
Caesars has not initiated or increased quarterly dividends, and the company does not have any dividend payment history. However, the company has been engaging in share buybacks, with a reported buyback yield of approximately 1.62%, contributing to a shareholder yield of the same percentage.
Potential Interest Rate Reductions and Future Earnings
During Caesars Entertainment's second-quarter earnings conference, Reeg discussed the potential impact of interest rate reductions on the company. He mentioned that a reduction in capital expenditures combined with potential interest rate cuts could improve future earnings and valuation. Analysts expect earnings growth from a trailing EPS of -$0.92 to a forecast of $1.13 next year.
B. Riley analyst David Bain believes that a more benign interest rate environment could sustain upward momentum for Caesars' shares from current valuation levels. If interest rates were to drop as soon as September, it could lead to $60 million of interest savings and new free cash flow for every 100 basis point drop in rates.
New Regional Casinos and Debt Trimming
Caesars is planning to open new regional casinos in Nebraska and Virginia. The company has been working on trimming debt burdens in the industry, with Reeg noting that while Caesars' predecessor firm Eldorado Resorts frequently used equity for acquisitions, he is not inclined to look at this option today because Caesars stock has struggled.
Potential Stock Buyback and Non-Core Asset Sales
Reeg also mentioned a potential future buyback of Caesars' stock if its value changes. He previously expressed a willingness to sell "non-core" casinos, and Promenade is believed to be a potential non-core asset for sale by Caesars.
Stock Performance and Takeover Rumours
Over the past year, shares of Caesars have declined 30%, making it one of the worst-performing gaming names over that period. However, at the time of writing, shares of Caesars are up 13% today.
Tom Reeg, CEO of Caesars Entertainment, also clarified that the company is not involved in takeover scuttlebutt surrounding Penn Entertainment (NASDAQ: PENN).
These developments paint a picture of a company that is actively managing its finances, looking to grow through new ventures, and working to improve its stock performance. As always, investors are advised to conduct their own due diligence before making investment decisions.
[1] Source: Yahoo Finance [2] Source: Seeking Alpha [3] Source: Nasdaq [4] Source: Zacks Investment Research [5] Source: Caesars Entertainment Investor Relations
- Analysts anticipate earnings growth for Caesars Entertainment, with a forecasted EPS of $1.13 next year, potentially influenced by interest rate reductions and capital expenditure decreases as discussed by CEO Tom Reeg.
- Caesars Entertainment is planning to open new regional casinos in Nebraska and Virginia, while also examining opportunities to sell non-core assets like the Promenade, as strategized by CEO Tom Reeg.
- In the face of takeover rumors surrounding Penn Entertainment, Caesars Entertainment CEO Tom Reeg clarified that the company is not involved in such scuttlebutt. The company's shares have declined significantly over the past year but are currently up 13%, creating an intriguing investment opportunity amidst ongoing mergers and acquisitions in the finance and business sectors.
