Caesars Entertainment Corp (CZR)

[investora2z]

The losses have increased again, and the situation is not too good. The topline remains stagnant, and the interest payments are rising. This time, the operating losses tripled to $637 million from $216 million in Q3'12. The revenues declined 0.7% on a yoy basis to $2.18 billion. Importantly, the main contributor, the casino revenues, declined by 7.1 percent to $1.466 billion. The net loss jumped by 50.6% on a yoy basis, from $505 million in Q3'12 to $761.4 million in Q3'13. The net loss per share for Q3'13 jumped to $6.03 compared to $4.03 in the same quarter last year. The interest expenses continued to mount, and increased 9.2% on a yoy basis from $515 million in Q3'12 to $563 million in Q3'13. There was a rise in interest payments in the first nine months of the current fiscal to $1.67 billion (compared to $1.57 billion in nine months of fiscal 2012). The declining revenues and increasing losses do not augur well for the financial health. The financial situation is risky, especially if one considers the load of debt. The company was able to raise $200 million in a public equity offering, the largest equity issuance since its initial public offering to improve liquidity, and also expects to generate $420 million in the fourth quarter when it closes the sale of a golf course in Macau. The sector requires capital investments and acquisitions to maintain growth, and enter emerging segments. Caesars had acquired Playtika and, more recently, MGT Capital Investments (MGT) has acquired Avcom in the social casino sector which holds a lot of potential. Investigations by government agencies into money-laundering charges do not help matters at all. The company needs to improve the financial performance soon, and some major steps may be required urgently to reduce the risks.