Caesars Earnings: Digital Shines, While Vegas and Regional Grind Amid Near-Term Headwinds

No-moat Caesars' shares rose 5% during July 30 after-hours trading, as it posted a stout 28% digital gaming revenue growth and impressive profitability across all business segments despite competitive, labor expense, and construction headwinds. Due to near-term headwinds at its physical casinos, we plan to reduce our 2024 total revenue to 0%-1% growth from a 2% lift, which is largely offset by a 40-basis-point increase to our EBITDA margin for the year, resulting in no expected material change to our $69 per share fair value estimate. Trading at just 5 times forward enterprise value/EBITDA, versus about 10 times prepandemic, we see shares as attractive for long-term investors. But we think angst around Caesars’ roughly $12 billion in total debt amid still-elevated financing costs and concerns surrounding a weakening consumer could lay a tough backdrop for shares in the near term.