Intrinsic value of Caesars Entertainment - CZR

Previous Close

$12.70

  Intrinsic Value

$52.27

stock screener

  Rating & Target

str. buy

+312%

  Value-price divergence*

0%

Previous close

$12.70

 
Intrinsic value

$52.27

 
Up/down potential

+312%

 
Rating

str. buy

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CZR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.32
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  3,877
  3,955
  4,045
  4,149
  4,266
  4,396
  4,537
  4,692
  4,859
  5,039
  5,233
  5,440
  5,661
  5,896
  6,145
  6,411
  6,691
  6,989
  7,303
  7,636
  7,986
  8,357
  8,747
  9,159
  9,592
  10,049
  10,530
  11,036
  11,568
  12,128
  12,718
Variable operating expenses, $m
 
  -2,550
  -2,612
  -2,684
  -2,764
  -2,852
  -2,950
  -3,055
  -3,170
  -3,294
  -3,426
  -3,729
  -3,880
  -4,041
  -4,213
  -4,394
  -4,587
  -4,791
  -5,006
  -5,234
  -5,474
  -5,728
  -5,996
  -6,278
  -6,575
  -6,888
  -7,218
  -7,565
  -7,930
  -8,314
  -8,718
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,378
  -2,550
  -2,612
  -2,684
  -2,764
  -2,852
  -2,950
  -3,055
  -3,170
  -3,294
  -3,426
  -3,729
  -3,880
  -4,041
  -4,213
  -4,394
  -4,587
  -4,791
  -5,006
  -5,234
  -5,474
  -5,728
  -5,996
  -6,278
  -6,575
  -6,888
  -7,218
  -7,565
  -7,930
  -8,314
  -8,718
Operating income, $m
  -5,501
  6,504
  6,658
  6,833
  7,030
  7,248
  7,487
  7,747
  8,029
  8,333
  8,659
  9,169
  9,541
  9,937
  10,358
  10,805
  11,278
  11,779
  12,310
  12,870
  13,461
  14,085
  14,743
  15,436
  16,167
  16,937
  17,747
  18,600
  19,498
  20,442
  21,435
EBITDA, $m
  -5,062
  7,039
  7,200
  7,386
  7,593
  7,824
  8,076
  8,351
  8,649
  8,970
  9,314
  9,682
  10,075
  10,493
  10,938
  11,410
  11,910
  12,439
  12,999
  13,590
  14,215
  14,874
  15,569
  16,301
  17,073
  17,886
  18,741
  19,642
  20,590
  21,587
  22,636
Interest expense (income), $m
  634
  629
  226
  255
  288
  325
  366
  412
  461
  514
  571
  633
  699
  769
  844
  924
  1,008
  1,098
  1,192
  1,292
  1,398
  1,510
  1,628
  1,752
  1,883
  2,021
  2,167
  2,320
  2,481
  2,651
  2,829
Earnings before tax, $m
  -6,100
  5,875
  6,432
  6,578
  6,742
  6,923
  7,121
  7,336
  7,569
  7,819
  8,088
  8,536
  8,842
  9,168
  9,514
  9,881
  10,270
  10,682
  11,117
  11,577
  12,063
  12,575
  13,115
  13,684
  14,284
  14,916
  15,581
  16,280
  17,017
  17,791
  18,606
Tax expense, $m
  27
  1,586
  1,737
  1,776
  1,820
  1,869
  1,923
  1,981
  2,044
  2,111
  2,184
  2,305
  2,387
  2,475
  2,569
  2,668
  2,773
  2,884
  3,002
  3,126
  3,257
  3,395
  3,541
  3,695
  3,857
  4,027
  4,207
  4,396
  4,595
  4,804
  5,024
Net income, $m
  -3,569
  4,289
  4,695
  4,802
  4,921
  5,053
  5,198
  5,355
  5,525
  5,708
  5,904
  6,231
  6,454
  6,692
  6,945
  7,213
  7,497
  7,798
  8,116
  8,451
  8,806
  9,180
  9,574
  9,990
  10,427
  10,888
  11,374
  11,885
  12,422
  12,988
  13,583

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,513
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,894
  15,210
  15,560
  15,959
  16,408
  16,906
  17,452
  18,046
  18,689
  19,383
  20,126
  20,922
  21,771
  22,675
  23,636
  24,656
  25,736
  26,880
  28,090
  29,368
  30,717
  32,141
  33,642
  35,225
  36,893
  38,649
  40,498
  42,445
  44,493
  46,648
  48,914
Adjusted assets (=assets-cash), $m
  13,381
  15,210
  15,560
  15,959
  16,408
  16,906
  17,452
  18,046
  18,689
  19,383
  20,126
  20,922
  21,771
  22,675
  23,636
  24,656
  25,736
  26,880
  28,090
  29,368
  30,717
  32,141
  33,642
  35,225
  36,893
  38,649
  40,498
  42,445
  44,493
  46,648
  48,914
Revenue / Adjusted assets
  0.290
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
Average production assets, $m
  7,981
  8,138
  8,326
  8,540
  8,780
  9,046
  9,338
  9,656
  10,000
  10,371
  10,769
  11,195
  11,649
  12,133
  12,647
  13,193
  13,771
  14,383
  15,030
  15,714
  16,436
  17,198
  18,001
  18,848
  19,741
  20,680
  21,670
  22,711
  23,807
  24,960
  26,173
Working capital, $m
  -2,760
  -395
  -405
  -415
  -427
  -440
  -454
  -469
  -486
  -504
  -523
  -544
  -566
  -590
  -615
  -641
  -669
  -699
  -730
  -764
  -799
  -836
  -875
  -916
  -959
  -1,005
  -1,053
  -1,104
  -1,157
  -1,213
  -1,272
Total debt, $m
  6,838
  2,456
  2,771
  3,131
  3,535
  3,982
  4,474
  5,008
  5,587
  6,211
  6,881
  7,597
  8,361
  9,175
  10,040
  10,957
  11,930
  12,959
  14,048
  15,198
  16,412
  17,694
  19,045
  20,470
  21,970
  23,551
  25,215
  26,967
  28,811
  30,750
  32,790
Total liabilities, $m
  18,071
  13,689
  14,004
  14,364
  14,768
  15,215
  15,707
  16,241
  16,820
  17,444
  18,114
  18,830
  19,594
  20,408
  21,273
  22,190
  23,163
  24,192
  25,281
  26,431
  27,645
  28,927
  30,278
  31,703
  33,203
  34,784
  36,448
  38,200
  40,044
  41,983
  44,023
Total equity, $m
  -3,177
  1,521
  1,556
  1,596
  1,641
  1,691
  1,745
  1,805
  1,869
  1,938
  2,013
  2,092
  2,177
  2,268
  2,364
  2,466
  2,574
  2,688
  2,809
  2,937
  3,072
  3,214
  3,364
  3,523
  3,689
  3,865
  4,050
  4,244
  4,449
  4,665
  4,891
Total liabilities and equity, $m
  14,894
  15,210
  15,560
  15,960
  16,409
  16,906
  17,452
  18,046
  18,689
  19,382
  20,127
  20,922
  21,771
  22,676
  23,637
  24,656
  25,737
  26,880
  28,090
  29,368
  30,717
  32,141
  33,642
  35,226
  36,892
  38,649
  40,498
  42,444
  44,493
  46,648
  48,914
Debt-to-equity ratio
  -2.152
  1.610
  1.780
  1.960
  2.150
  2.360
  2.560
  2.780
  2.990
  3.200
  3.420
  3.630
  3.840
  4.050
  4.250
  4.440
  4.640
  4.820
  5.000
  5.180
  5.340
  5.510
  5.660
  5.810
  5.960
  6.090
  6.230
  6.350
  6.480
  6.590
  6.700
Adjusted equity ratio
  -0.350
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -3,569
  4,289
  4,695
  4,802
  4,921
  5,053
  5,198
  5,355
  5,525
  5,708
  5,904
  6,231
  6,454
  6,692
  6,945
  7,213
  7,497
  7,798
  8,116
  8,451
  8,806
  9,180
  9,574
  9,990
  10,427
  10,888
  11,374
  11,885
  12,422
  12,988
  13,583
Depreciation, amort., depletion, $m
  439
  534
  543
  553
  564
  576
  589
  604
  620
  637
  655
  514
  534
  557
  580
  605
  632
  660
  689
  721
  754
  789
  826
  865
  906
  949
  994
  1,042
  1,092
  1,145
  1,201
Funds from operations, $m
  6,417
  4,823
  5,238
  5,355
  5,485
  5,629
  5,787
  5,959
  6,145
  6,344
  6,559
  6,744
  6,989
  7,249
  7,525
  7,818
  8,129
  8,458
  8,805
  9,172
  9,560
  9,969
  10,400
  10,854
  11,333
  11,837
  12,368
  12,926
  13,514
  14,133
  14,783
Change in working capital, $m
  5,829
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
Cash from operations, $m
  588
  4,831
  5,247
  5,365
  5,497
  5,642
  5,801
  5,974
  6,161
  6,362
  6,578
  6,765
  7,011
  7,272
  7,550
  7,845
  8,157
  8,487
  8,837
  9,205
  9,595
  10,006
  10,439
  10,895
  11,376
  11,883
  12,416
  12,977
  13,568
  14,189
  14,842
Maintenance CAPEX, $m
  0
  -366
  -373
  -382
  -392
  -403
  -415
  -428
  -443
  -459
  -476
  -494
  -514
  -534
  -557
  -580
  -605
  -632
  -660
  -689
  -721
  -754
  -789
  -826
  -865
  -906
  -949
  -994
  -1,042
  -1,092
  -1,145
New CAPEX, $m
  -220
  -158
  -187
  -214
  -240
  -266
  -292
  -318
  -344
  -371
  -398
  -426
  -454
  -484
  -514
  -546
  -578
  -612
  -647
  -684
  -722
  -762
  -803
  -847
  -892
  -940
  -989
  -1,041
  -1,096
  -1,153
  -1,213
Cash from investing activities, $m
  4,258
  -524
  -560
  -596
  -632
  -669
  -707
  -746
  -787
  -830
  -874
  -920
  -968
  -1,018
  -1,071
  -1,126
  -1,183
  -1,244
  -1,307
  -1,373
  -1,443
  -1,516
  -1,592
  -1,673
  -1,757
  -1,846
  -1,938
  -2,035
  -2,138
  -2,245
  -2,358
Free cash flow, $m
  4,846
  4,307
  4,687
  4,769
  4,865
  4,973
  5,094
  5,228
  5,374
  5,533
  5,704
  5,845
  6,043
  6,254
  6,480
  6,719
  6,974
  7,244
  7,530
  7,832
  8,152
  8,490
  8,846
  9,223
  9,619
  10,037
  10,478
  10,942
  11,430
  11,944
  12,484
Issuance/(repayment) of debt, $m
  -148
  -4,382
  315
  360
  404
  448
  491
  535
  579
  624
  669
  716
  764
  814
  865
  918
  972
  1,029
  1,089
  1,150
  1,214
  1,281
  1,351
  1,424
  1,501
  1,581
  1,664
  1,752
  1,843
  1,939
  2,040
Issuance/(repurchase) of shares, $m
  -1,126
  409
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,609
  -3,973
  315
  360
  404
  448
  491
  535
  579
  624
  669
  716
  764
  814
  865
  918
  972
  1,029
  1,089
  1,150
  1,214
  1,281
  1,351
  1,424
  1,501
  1,581
  1,664
  1,752
  1,843
  1,939
  2,040
Total cash flow (excl. dividends), $m
  3,237
  334
  5,001
  5,129
  5,269
  5,421
  5,586
  5,763
  5,953
  6,157
  6,374
  6,562
  6,807
  7,068
  7,344
  7,637
  7,946
  8,273
  8,618
  8,982
  9,366
  9,771
  10,198
  10,647
  11,120
  11,618
  12,142
  12,693
  13,273
  13,883
  14,524
Retained Cash Flow (-), $m
  4,164
  -4,698
  -35
  -40
  -45
  -50
  -55
  -59
  -64
  -69
  -74
  -80
  -85
  -90
  -96
  -102
  -108
  -114
  -121
  -128
  -135
  -142
  -150
  -158
  -167
  -176
  -185
  -195
  -205
  -215
  -227
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -4,364
  4,966
  5,089
  5,224
  5,371
  5,531
  5,703
  5,889
  6,087
  6,299
  6,482
  6,722
  6,978
  7,248
  7,535
  7,838
  8,159
  8,497
  8,855
  9,231
  9,629
  10,048
  10,489
  10,953
  11,442
  11,957
  12,499
  13,068
  13,668
  14,298
Discount rate, %
 
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.65
  23.79
  24.98
  26.23
  27.54
  28.91
  30.36
  31.88
  33.47
  35.14
  36.90
  38.75
  40.68
  42.72
  44.85
  47.10
  49.45
  51.92
  54.52
  57.25
  60.11
  63.11
  66.27
PV of cash for distribution, $m
 
  -3,759
  3,634
  3,117
  2,637
  2,198
  1,802
  1,453
  1,150
  892
  678
  500
  363
  257
  177
  119
  77
  49
  30
  18
  10
  5
  3
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Caesars Entertainment Corporation, through its subsidiaries, provides casino-entertainment and hospitality services in the United States and internationally. The company operates through two segments, Caesars Entertainment Resort Properties, and Caesars Growth Partners Casino Properties and Developments. It operates 15,000 slot machines and 1,200 table games, as well as other games comprising keno, poker, and race and sports books; and buffets, restaurants, bars, nightclubs, and lounges located throughout the company's casinos, as well as banquets and room service. As of December 31, 2016, the company owned and operated 12 casinos. It also operates online gaming business that provides real money games; and owns the World Series of Poker tournaments and brand. In addition, the company provides various retail and entertainment offerings in its casinos, as well as The LINQ promenade, an open-air dining, entertainment, and retail development; and operates The AXIS theater at Planet Hollywood, and The High Roller, a 550-foot observation wheel. The company was formerly known as Harrah's Entertainment Inc. and changed its name to Caesars Entertainment Corporation in November 2010. Caesars Entertainment Corporation was founded in 1937 and is based in Las Vegas, Nevada.

FINANCIAL RATIOS  of  Caesars Entertainment (CZR)

Valuation Ratios
P/E Ratio -0.5
Price to Sales 0.5
Price to Book -0.6
Price to Tangible Book
Price to Cash Flow 3.2
Price to Free Cash Flow 5.1
Growth Rates
Sales Growth Rate -1.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.5%
Cap. Spend. - 3 Yr. Gr. Rate -21.2%
Financial Strength
Quick Ratio 17
Current Ratio 0.4
LT Debt to Equity -212.4%
Total Debt to Equity -215.2%
Interest Coverage -9
Management Effectiveness
Return On Assets -21.6%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital -61.5%
Ret/ On T. Cap. - 3 Yr. Avg. -10.4%
Return On Equity 325.9%
Return On Equity - 3 Yr. Avg. 33.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 54.6%
Gross Margin - 3 Yr. Avg. 51.6%
EBITDA Margin -129.7%
EBITDA Margin - 3 Yr. Avg. 12.4%
Operating Margin -141.9%
Oper. Margin - 3 Yr. Avg. 4.8%
Pre-Tax Margin -157.3%
Pre-Tax Margin - 3 Yr. Avg. -17.3%
Net Profit Margin -92.1%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate -0.4%
Eff/ Tax Rate - 3 Yr. Avg. 5.2%
Payout Ratio 0%

CZR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CZR stock intrinsic value calculation we used $3877 million for the last fiscal year's total revenue generated by Caesars Entertainment. The default revenue input number comes from 2016 income statement of Caesars Entertainment. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CZR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 16.1%, whose default value for CZR is calculated based on our internal credit rating of Caesars Entertainment, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Caesars Entertainment.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CZR stock the variable cost ratio is equal to -64.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CZR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 9.2% for Caesars Entertainment.

Corporate tax rate of 27% is the nominal tax rate for Caesars Entertainment. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CZR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CZR are equal to 205.8%.

Life of production assets of 21.8 years is the average useful life of capital assets used in Caesars Entertainment operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CZR is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-3177 million for Caesars Entertainment - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 147.423 million for Caesars Entertainment is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Caesars Entertainment at the current share price and the inputted number of shares is $1.9 billion.

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COMPANY NEWS

▶ Caesars Entertainment seeing growth in Las Vegas   [Jun-07-17 09:49AM  Fox Business Videos]
▶ [$$] Effort to harmonise risky-loans rules in doubt   [Jun-05-17 11:02PM  Financial Times]
▶ [$$] Caesars, Exiting Bankruptcy, Seeks Growth Beyond Gambling   [May-26-17 11:33PM  The Wall Street Journal]
▶ Caesers on the Brink of Exiting Bankruptcy   [08:45AM  TheStreet.com]
▶ The new Vegas namaste: Yoga on a Ferris wheel, near dolphins   [May-15-17 06:30PM  Associated Press]
▶ Caesars Entertainment to Host Sell-Side Analyst Day   [May-12-17 08:13AM  PR Newswire]
▶ Caesars Entertainment Reprices $2.4 Billion Loan   [May-10-17 08:53AM  TheStreet.com]
▶ Caesars reports 1Q loss   [May-02-17 05:04PM  Associated Press]
▶ Caesars Entertainment Stock Up on Macquarie Rating   [Apr-20-17 02:40PM  TheStreet.com]
▶ [$$] Caesars Entertainment Unit's Bankruptcy Bills Near $400 Million   [Apr-18-17 12:20PM  The Wall Street Journal]
▶ Las Vegas Strip's New Growth Driver: Parking Fees   [Apr-16-17 12:14PM  Motley Fool]
▶ Britney Spears' 'Piece of Me' Las Vegas Show is Coming to an End   [Apr-08-17 08:13PM  Entertainment Tonight Videos]
▶ [$$] Caesars, National Retirement Fund Settle Pension Dispute   [Mar-21-17 02:06PM  The Wall Street Journal]
▶ [$$] Caesars, National Retirement Fund Settle Pension Dispute   [02:06PM  at The Wall Street Journal]
▶ Better Buy: Wynn Resorts Ltd. vs. Caesars Entertainment   [Mar-20-17 06:44PM  Motley Fool]
▶ These Are the Most Expensive Hotels in Las Vegas   [Mar-03-17 09:37AM  at Motley Fool]
▶ Apollo appoints new board of directors at Rackspace   [Mar-01-17 09:33AM  at bizjournals.com]
▶ [$$] Caesars Unit Secures New Loans as it Works Through Restructuring   [Feb-21-17 03:27PM  at The Wall Street Journal]
▶ [$$] Palank's Take: CEOC Restructuring Stings Caesars   [Feb-17-17 02:09PM  at The Wall Street Journal]
▶ New spa marks $6 million renovation at Horseshoe Tunica   [Jan-30-17 03:45PM  at bizjournals.com]
Stock chart of CZR Financial statements of CZR Annual reports of CZR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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