Caesars CEO Regg increases stake in company
Caesars Entertainment Inc. (NASDAQ: CZR ) shares are up 8.68% year to date and 13.14% over the past 12 months. But CEO Tom Reger clearly sees value in the casino company he runs.
A recent Form 4 filed with the U.S. Securities and Exchange Commission (SEC) confirms that Reeg purchased 7,500 shares of Caesars stock earlier this month. The purchase was made on June 14, with an average price of $49.93 and a total transaction price of $370,725. The stock is down 10% for the week, closing at $45.21 on Friday.
The acquisition was made through a trust that currently owns 17,500 shares of the Flamingo operator. Reeg owns an additional 318,720 employer shares in a personal investment account.
Regg became CEO of the country's largest casino operator by assets in July 2020, when Eldorado Resorts, which he previously led, acquired the Harrah's operator and created "New Caesars."
Reg gets Caesar moving in the right direction
Reg took charge of Caesars Hotels during a turbulent period. The coronavirus pandemic has not only stifled the gaming industry, but also cast doubt on whether Eldorado and Caesar can make it to the altar of merger.
Caesars shares have risen about 36% since the deal closed and Reeg took the helm of the new company. It's also a favorite among Wall Street analysts when the Las Vegas Strip and the operator's regional casinos perform well.
Trends in the Vegas and regional markets remain largely healthy, and the company sees no clear signs that its customer base is weakening,” Stifel analyst Steven Wieczynski wrote in a note on Caesars earlier this month . “We believe current trading levels have resulted in a significant slowdown in consumer trends. "
Wieczynski rates the stock a "buy" and has a price target of $68, representing a 51.9% upside from the June 23 closing price.
Reeg drives debt reduction and iGaming profitability
One of the reasons Wall Street is excited about Reeg and the Caesars management team is the effort to reduce debt and make Caesars Digital potentially profitable later this year. This entity includes Internet Casino and Caesars Sportsbook.
The gaming company had $13.2 billion in debt at the end of the first quarter. While this is one of the highest values in the industry, it is significantly lower than what Eldorado realized when it acquired the company, and represents significant improvement over the previous year. What's impressive is the debt reduction Caesars achieved this year. 2022 was achieved without asset sales. Analysts and the company itself expect to eliminate more than $1 billion in debt this year, even without the support of selling gaming facilities.
Caesars could reduce leverage to three times by 2025 while generating $5 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA). As Wieczynski noted, that could mean free cash flow of $12 per share.
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Source: www.casino.org
