CAESARS ENTERTAINMENT, INC. (CZR): what the price requires

At today's price, CAESARS ENTERTAINMENT, INC. (CZR) is priced for +5.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CZR

Headline

FieldValue
TickerCZR
CompanyCAESARS ENTERTAINMENT, INC.
Current price$29.74/sh
CompositionCasino 58% / Food and beverage 15% / Hotel 17% / Other 11%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed5.2%
Operating margin today17.7%
Margin compression implied-12.5pp
Implied growth5.7%
Multiple paid15x operating income

The operating-margin requirement is derived from the framework's value band at year 9, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.2pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.48σ
cohort percentile (of 212 peers)35
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.97x3expensive
Earnings0.34x1justifies
Relative0.21x3justifies
Growth1.13x3expensive

Families that justify the price: Earnings, Relative, Growth Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.6%); the inversion above states its own rate.

Per-Model Detail (n=10)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$26.321.13xyesFCF base $0.5B, growth 2% (input: historical growth), terminal g 2.4%, WACC 5.6%, 5yr projection
DCF Exit MultipleGrowth$27.191.09xyesExit EV/EBITDA: 4.0x / 5.3x / 7.3x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$141.690.21xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$16.751.78xyesReference only (book value floor): BV/sh $16.75, ROE negative
Two-Stage Excess ReturnAsset$15.071.97xyesReference only (book value with convergence): BV/sh $16.75, ROE converges to ke
Discounted Future Market CapGrowth$20.801.43xyesRev $11.6B, growth 2% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$88.710.34xyesNormalized EBIT (5y avg op income, one-time charges added back) $2.07B × (1−21%) / WACC 5.6% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$138.040.22xyesEBITDA $3.28B × sector EV/EBITDA 12.0x
FCF YieldEarnings$0.012974.00xyesFCF $538.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.012974.00xyesSBC-adj FCF $0.45B (FCF $0.54B − SBC $0.09B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$8.103.67xyesBV $16.75 × (ROIC 2.7% / WACC 5.6%)
P/Sales SectorRelative$141.690.21xyesRevenue $11.56B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$24.2b
Net debt / NOPAT (after-tax)15.10x
Net debt / operating income (pre-tax)11.93x
Interest coverage0.9x
Share count CAGR (buyback)-1.2%
Burning cashno

Bullet Takeaways

Bull Case

Read Caesars at its current stage and the bull case comes into focus: this is a mature, cash-generative casino operator with a newer, fast-scaling digital business layered on top. The land-based business is the engine. The 10-K describes how most "revenue is generated by its gaming operations, which includes its casino properties, retail and online sports betting, and online gaming," supplemented by "hotels, restaurants, bars, entertainment" and other amenities. That physical network produced consolidated net revenue of $2.9 billion in the first quarter, up 3%, with Las Vegas occupancy at 95.3% and adjusted EBITDAR near $887 million. A nearly-full Las Vegas at rising room rates is a durable, hard-to-replicate cash stream, and the company is still adding to it, citing "favorable results from our recently completed Caesars Virginia and Caesars New Orleans development projects."

The digital business is where the growth story lives, and it has crossed into real profitability. The Digital segment posted record first-quarter revenue of $374 million and adjusted EBITDA of $69 million, a sharp step up from $43 million a year earlier. Online sports betting and iGaming carry high incremental margins once the customer-acquisition spending matures, and Caesars can market its digital products to the same loyalty database that fills its physical casinos. That cross-sell between the rewards program and the app is an advantage pure-play digital competitors do not have, and the segment's swing from heavy losses to growing EBITDA is the inflection the bull case is built on.

The equity is geared, which means modest improvements compound. With a large fixed debt load, every dollar of incremental property and digital EBITDA that exceeds the interest bill flows disproportionately to equity, and the company is using its free cash flow to pay debt down. The share count has edged lower rather than higher, so management is not diluting through the recovery. A stable, high-occupancy land-based base, a digital arm that has turned the corner on profitability, and a deleveraging path together describe a classic levered-equity recovery: if the cash flow holds and the debt shrinks, the equity value can move far more than the underlying business does.

Bear Case

The variable with the most leverage over Caesars is interest rates, because the company is one of the most heavily indebted operators in its sector, and the current price does not appear to fully discount what that means. The balance sheet carries debt many times its annual operating profit, and on a trailing basis the interest bill consumes essentially all of the operating income, leaving little for equity holders after the lenders are paid. The 10-K lays out the stack plainly, listing "the CEI Term Loan A, the CEI Term Loan B, the CEI Term Loan B-1 and the indentures governing the CEI Senior Secured Notes due 2030, the CEI Senior Secured Notes due 2032, the CEI Senior Notes due 2029" among its obligations, much of it floating-rate at a spread over SOFR. When rates stay high, the floating-rate portion costs more, and refinancing the fixed maturities happens at higher coupons, both directly reducing the cash available to equity.

The land-based business, the part that services the debt, is mature and competitive, not growing. Las Vegas adjusted EBITDAR actually slipped $7 million year over year on flat revenue, and the regional segment was down modestly as well. The 10-K is candid that regional gaming faces "increased competition from openings of newly developed casinos and plans of development in certain regions, including new tribal expansions throughout the United St"ates. A flat-to-declining core that has to fund a mountain of debt is the structural problem: there is little organic growth in the cash flow that pays the interest, so deleveraging depends on holding the line rather than expanding.

The growth that justifies the premium is concentrated and small. The valuation locates the priced-in premium in Caesars Digital, and assumes that segment holds growth near the top of what it can self-fund for roughly six years, a pace only about a quarter of comparable fast-growers have sustained. Digital EBITDA, while inflecting, is still a small fraction of the company's total, so the read is sensitive: a stumble in the digital ramp, a wave of promotional competition in sports betting, or a tax or regulatory change in a key state would hit the very segment carrying the optionality. Meanwhile the reported bottom line is still negative, with a first-quarter loss of $0.48 per share. The equity is a leveraged bet that digital keeps growing and the land-based cash flow holds long enough to shrink the debt, and either disappointing leaves the leverage working against shareholders.

Valuation

This report assigns no fair value and no target. It works backward from the $29.22 price (June 27, 2026) to the assumption embedded in it, then measures the distance to each way of valuing the business, segment by segment where it matters.

The sharpest statement of the bet is in the digital business, so lead there. The price decomposes into a premium that sits on Caesars Digital, and it assumes that segment holds growth near the ceiling it can self-fund for about six years. That is a demanding assumption for a segment whose earnings base is still small: only about a quarter of comparable fast-growers sustained that pace for roughly six years, and the read is sensitive precisely because the digital base is modest relative to the company. The land-based segments, casino, food and beverage, and hotel, are valued more conventionally and are roughly fairly priced on their cash flows; the optionality and the stretch both live in digital.

Across the whole company the methods split in a telling way. The earnings-power and peer-multiple lenses say the equity is supported or even cheap on the property cash flows, while the asset-value lens, against a $16.75 book value and negative trailing return on equity, says expensive. That is the shape of a value-supported, asset-backed operator rather than a pure growth bet, with the caveat that the reported earnings are negative because the interest bill swallows operating profit. The right gauge for the casinos is property EBITDAR, which is solid; the right gauge for the equity is what is left after debt service, which is thin.

Solvency is not a footnote here, it is the center of the analysis. Net debt runs many times operating profit, and trailing interest coverage is below one, meaning operating profit alone does not cover the interest, the gap being bridged by depreciation add-backs and the cash EBITDAR the GAAP figure understates. That is sustainable while the property cash flows hold and digital grows, but it leaves almost no margin for a downturn. The deleveraging path is therefore the whole equity thesis: shrink the debt and the equity value can rise sharply on the same business; fail to, and rising rates or a flat core compress it just as sharply. The price is a leveraged option on the digital ramp and the debt paydown proceeding together.

Catalysts

The clearest catalyst is the digital segment's profitability trajectory. Caesars Digital posted record first-quarter revenue of $374 million and adjusted EBITDA of $69 million, up from $43 million a year earlier. Because that segment carries the premium in the price, each quarterly digital result is the most important read on whether the inflection is durable, and new state launches or product additions in sports betting and iGaming are discrete events that move it.

Deleveraging and the property cash flows are the second catalyst. Consolidated net revenue rose 3% to $2.9 billion with adjusted EBITDAR near $887 million, but Las Vegas EBITDAR slipped $7 million on flat revenue while occupancy held at 95.3%. The company continues to use free cash flow to reduce debt, so each update on total debt and on refinancing activity, against a stack that includes notes due 2029, 2030, and 2032, is a catalyst for a heavily levered equity.

The variable with the most leverage is the rate environment. With a large floating-rate component and fixed maturities to refinance, the cost of Caesars' debt moves with interest rates, and a shift in the rate path would change the cash available to equity faster than any single property or digital result.

Peer Cohorts (Per Segment, With Filing Citations)

Las Vegas (reported)

Regional (reported)

Caesars Digital (reported)

Managed and Branded (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Caesars Q1 2026 results release · Caesars Q1 2026 earnings call

View the full interactive CZR report on boothcheck