Caesars Loyalty and Ongoing Investment Not Enough to Warrant a Moat; Shares a Touch Undervalued
We are initiating coverage of Caesars Entertainment with a no-moat rating and fair value estimate of $10.30. Trading just above 10 times 2019 enterprise value/EBITDA we see shares slightly undervalued. For those seeking gaming exposure, no-moat MGM trades at a wider margin of safety to our $38 valuation.We think Caesars' Entertainment will sustain its competitive positioning in the lower-growth lower-barrier Las Vegas (57% of estimated 2019 EBITDAR) and other U.S. regions (45%). (Caesars' manag...
Caesars Entertainment is a holding company that provides casino-entertainment and hospitality services. The company's facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. In addition to its brick and mortar assets, the company operates an online gaming business that provides real money games in certain jurisdictions and provides retail sports wagering in certain jurisdictions. The company's consolidated business is composed of five complementary businesses: casino entertainment, food and beverage, rooms and hotel, casino management services, and entertainment and other business operations, including mobile sports betting.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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