Last Update 14 Dec 25

Fair value Decreased 22%

CZR: Las Vegas And Regional Softness Will Pressure Future Earnings Outlook

Analysts have reduced their fair value estimate for Caesars Entertainment to $21.00 from $27.00, reflecting lowered confidence in Las Vegas and regional growth, increased capital needs after weaker than expected Q3 results, and concerns over potential rent pressure from key lease agreements, even though longer term revenue growth and margin assumptions remain comparatively constructive.

Analyst Commentary

Recent Street research reinforces a more cautious stance on Caesars, with several bearish analysts trimming price targets and dialing back ratings as they reassess the company’s earnings visibility and balance sheet flexibility. While longer term demand and margin assumptions remain intact in some models, near to medium term execution risks around Las Vegas, regional properties, and digital profitability are driving a reset in expectations.

Multiple firms have now converged around price targets in the low to mid 20s, reflecting reduced confidence that Caesars can quickly reaccelerate growth or expand margins from current levels. Lower than expected Q3 results, commentary suggesting incremental capital needs, and ongoing consumer softness at the lower end are being cited as key inputs into these revised valuation frameworks.

At the same time, a subset of the Street continues to argue that the risk reward skew remains positive for longer term investors, pointing to signs of underlying demand resilience and improving player engagement in digital. However, this more constructive view is increasingly tempered by concerns that additional estimate cuts may be required if consumer pressure persists or if capital allocation priorities shift further toward balance sheet support rather than growth investments.

Bearish analysts are also closely watching potential structural headwinds tied to Caesars related lease agreements, which could weigh on cash flows and limit financial flexibility if regional fundamentals deteriorate. Expectations for flat to negative regional gaming trends are feeding into scenarios that include future rent relief, pressuring both landlord and operator valuation multiples and underscoring the fragility of current forecasts.

Bearish Takeaways

Bearish analysts have downgraded Caesars and cut price targets into the low 20s, arguing that weaker Q3 performance and more complex paths to growth warrant lower valuation multiples and a reduced probability of upside.
Concerns around Las Vegas and regional demand, including summer softness and ongoing pressure on lower end consumers, are driving estimate revisions that challenge prior expectations for steady margin expansion.
Heightened capital needs, potential for further investment in digital marketing, and the risk of additional funding requirements are seen as constraining upside and limiting balance sheet driven rerating potential.
Uncertainty around key regional lease economics, including the risk of future rent cuts, is adding another layer of execution and cash flow risk, leading bearish analysts to apply more conservative assumptions to long term earnings power.

What's in the News

Jefferies downgraded Caesars to Hold from Buy and cut its price target to $22, citing weak Q3 results, low confidence in Las Vegas and regional growth, and a more complex path to upside (Jefferies research note).
Truist lowered its price target on Caesars to $30 from $32 but maintained a Buy rating, pointing to Q3 EBITDA weakness driven by Las Vegas summer softness while still seeing risk reward as positive at the current valuation (Truist research note).
Cboe Global detailed plans to launch a predictions market platform that will initially exclude sports, highlighting a growing, regulated event-contract space that includes Caesars among major publicly traded gaming peers (Bloomberg).
Caesars completed a $249.85 million share repurchase program, buying back about 4.45 percent of its shares outstanding, signaling continued capital return even as Street concerns about capital needs increase (company announcement).
The company expanded its Caesars Rewards and digital ecosystem with new product launches, including the Caesars Rewards Shop and exclusive online slot titles such as Kingdom of Horus and Reign of Anubis, deepening integration between land based and online gaming (company announcements).

Valuation Changes

Fair Value Estimate reduced significantly to $21.00 from $27.00, implying a lower assessed intrinsic value per share.
Discount Rate increased slightly to 12.5 percent from 12.32 percent, modestly raising the required return used in valuation models.
Revenue Growth revised higher, with the long term revenue growth factor moving from approximately 1.10x to about 1.32x, reflecting a more optimistic top line trajectory despite near term headwinds.
Profit Margin adjusted upward materially, with the long term margin factor rising from roughly 0.74x to about 1.31x, indicating improved expectations for structural profitability over time.
Future P/E Multiple lowered substantially to about 35.0x from roughly 85.6x, signaling a more conservative view on the valuation investors may be willing to pay for future earnings.

Increasing digital gaming trends and changing demographics threaten profitability and visitor rates at traditional casino properties.
High leverage, aging assets, and minimal international exposure elevate risks to free cash flow, resilience, and future margin expansion.
Strong digital and group segment growth, enhanced customer analytics, disciplined capital allocation, and cost control are driving higher margins, free cash flow, and sustained profitability.

Catalysts

About Caesars Entertainment

Operates as a gaming and hospitality company.What are the underlying business or industry changes driving this perspective?

Even as online gaming and sports betting expand, this shift is expected to keep eroding long-term profitability of Caesars' large brick-and-mortar casino portfolio, as digital growth cannibalizes visitation and revenues from destination properties, reducing overall EBITDA margins over time.
Millennials and Gen Z are increasingly favoring experiences and digital entertainment over traditional casino gambling, risking deterioration of Caesars' core customer base, which could suppress future visitation rates and top-line revenues at flagship properties.
Persistent high leverage from past mergers and acquisitions, combined with rising labor costs from new union contracts, is likely to eat into free cash flow and compress net margins, leaving earnings and future margin expansion highly vulnerable.
Many of Caesars' properties are aging and require substantial ongoing capital expenditures for remodeling and upgrades, putting long-term pressure on free cash flow conversion and elevating the risk of lower returns on investment if market conditions soften further.
Limited international diversification leaves Caesars exposed to regional downturns and regulatory tightening in mature U.S. markets, making revenue streams less resilient; potential regulatory or tax changes could further eat into profitability, with risk to both net income and future growth.

Caesars Entertainment Earnings and Revenue Growth

Caesars Entertainment Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more pessimistic perspective on Caesars Entertainment compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
The bearish analysts are assuming Caesars Entertainment's revenue will grow by 1.1% annually over the next 3 years.
The bearish analysts assume that profit margins will increase from -1.7% today to 0.7% in 3 years time.
The bearish analysts expect earnings to reach $87.2 million (and earnings per share of $0.42) by about August 2028, up from $-195.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 85.6x on those 2028 earnings, up from -27.9x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 2.11% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Caesars Entertainment Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Caesars' digital segment is delivering record growth and on track to exceed $500 million of EBITDA by 2026, with structural improvements such as proprietary technology rollouts and partnership expense roll-offs driving high-margin, recurring digital revenues which will boost both top-line growth and net margins.
Robust group bookings and event calendars in Las Vegas for the fourth quarter of 2025 and into 2026 are expected to set records for group room nights, helping offset current leisure softness and supporting higher average daily rates and occupancy, which will enhance revenue and profitability.
Strategic customer reinvestment through targeted marketing and database analytics is already showing promising returns in both the Las Vegas and regional segments, with evidence that these efforts are increasing rated gaming play and supporting sustainable revenue growth and EBITDA improvement.
Recent capital investments in property upgrades, new amenities, and slot deployments are generating strong returns, while planned room remodels and asset-light management contracts are set to expand high-margin revenue streams and free cash flow, lending support to future net earnings and cash generation.
Successful cost discipline, including recent redemption of expensive debt and anticipated cash tax savings, has improved free cash flow and reduced interest costs, giving Caesars more flexibility to balance share buybacks and debt repayment, which can support long-term earnings per share and shareholder value.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bearish price target for Caesars Entertainment is $27.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Caesars Entertainment's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $61.0, and the most bearish reporting a price target of just $27.0.
In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $11.8 billion, earnings will come to $87.2 million, and it would be trading on a PE ratio of 85.6x, assuming you use a discount rate of 12.3%.
Given the current share price of $26.14, the bearish analyst price target of $27.0 is 3.2% higher. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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