Bear of the Day: Caesars Entertainment (CZR)

Sometimes a stock looks cheap for a reason. Most of the time, the reason is macro trends affecting the industry the stock is in. No matter how nice it looks on paper, no matter how much value you perceive…it could get worse. Beware of those value traps. One way to avoid them is by leaning on the Zack Rank. Stocks in the bad graces of our Zacks Rank often have earnings estimates moving in the wrong direction.

Today’s Bear of the Day is one of those names. It’s Zacks Rank #5 (Strong Sell) Caesars Entertainment (CZR). Caesars remains one of the biggest names in gaming, operating iconic Las Vegas resorts alongside a massive portfolio of regional casinos and a growing digital sportsbook business. But despite its recognizable brands, the investment story continues to be weighed down by one overwhelming issue, debt.

The company carries approximately $11.9 billion in debt, and that's before factoring in billions more in long-term lease obligations tied to its casino real estate. Those financial commitments translate into roughly $2.3 billion in annual interest expense, making it difficult for Caesars to consistently generate meaningful profits even when business conditions are favorable.

The result has been a string of disappointing bottom-line results. Caesars posted another loss in the first quarter of 2026, missing Wall Street earnings expectations as higher interest costs continued to eat away at operating performance. While revenue has remained relatively stable, growth has been sluggish, and adjusted EBITDA has largely stalled despite continued consumer spending.

That's a problem because gaming is an inherently cyclical business. Las Vegas visitation fluctuates with the economy, regional casinos depend heavily on discretionary consumer spending, and digital sports betting remains an intensely competitive market with high customer acquisition costs and evolving regulatory hurdles. If the economy slows, consumers typically cut back on vacations, casino visits, and entertainment spending long before reducing essential purchases.

The stock has missed earnings expectations for six consecutive quarters, helping to prompt analysts all over Wall Street to cut their estimates. The Leisure and Recreational Services industry ranks in the Bottom 16% of our Zacks Industry Rank. There are a few stocks within this industry that are in the good graces of our Rank. These include Zacks Rank #1 (Strong Buy) The Marcus (MCS) and Zacks Rank #2 (Buy) Pursuit Attractions and Hospitality (PRSU).

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This article originally published on Zacks Investment Research (zacks.com).

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