Intrinsic value of Caesars Entertainment Corporation - CZR

Previous Close

$8.67

  Intrinsic Value

$27.65

stock screener

  Rating & Target

str. buy

+219%

Previous close

$8.67

 
Intrinsic value

$27.65

 
Up/down potential

+219%

 
Rating

str. buy

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 0001), $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 5.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.30
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
Revenue, $m
  9,339
  10,336
  11,380
  12,472
  13,611
  14,797
  16,033
  17,318
  18,653
  20,041
  21,483
  22,982
  24,540
  26,160
  27,845
  29,599
  31,424
  33,325
  35,307
  37,373
  39,528
  41,776
  44,124
  46,577
  49,140
  51,819
  54,621
  57,552
  60,620
  63,830
Variable operating expenses, $m
  3,246
  3,421
  3,605
  3,797
  3,997
  4,206
  4,423
  4,649
  4,883
  5,127
  3,776
  4,040
  4,314
  4,599
  4,895
  5,203
  5,524
  5,858
  6,206
  6,569
  6,948
  7,344
  7,756
  8,187
  8,638
  9,109
  9,601
  10,117
  10,656
  11,220
Fixed operating expenses, $m
  4,776
  4,881
  4,988
  5,098
  5,210
  5,325
  5,442
  5,562
  5,684
  5,809
  5,937
  6,067
  6,201
  6,337
  6,477
  6,619
  6,765
  6,914
  7,066
  7,221
  7,380
  7,543
  7,708
  7,878
  8,051
  8,228
  8,409
  8,595
  8,784
  8,977
Total operating expenses, $m
  8,022
  8,302
  8,593
  8,895
  9,207
  9,531
  9,865
  10,211
  10,567
  10,936
  9,713
  10,107
  10,515
  10,936
  11,372
  11,822
  12,289
  12,772
  13,272
  13,790
  14,328
  14,887
  15,464
  16,065
  16,689
  17,337
  18,010
  18,712
  19,440
  20,197
Operating income, $m
  1,317
  2,033
  2,787
  3,577
  4,403
  5,267
  6,168
  7,107
  8,086
  9,105
  11,770
  12,875
  14,025
  15,224
  16,474
  17,776
  19,135
  20,554
  22,035
  23,582
  25,199
  26,890
  28,660
  30,512
  32,451
  34,482
  36,610
  38,841
  41,180
  43,633
EBITDA, $m
  4,018
  4,851
  5,727
  6,645
  7,606
  8,609
  9,655
  10,745
  11,880
  13,062
  14,292
  15,573
  16,906
  18,295
  19,742
  21,251
  22,824
  24,466
  26,179
  27,969
  29,839
  31,794
  33,839
  35,979
  38,219
  40,565
  43,022
  45,597
  48,296
  51,126
Interest expense (income), $m
  634
  1,371
  1,552
  1,744
  1,946
  2,157
  2,376
  2,606
  2,844
  3,092
  3,350
  3,618
  3,896
  4,185
  4,486
  4,799
  5,124
  5,463
  5,815
  6,182
  6,565
  6,963
  7,379
  7,813
  8,267
  8,740
  9,235
  9,752
  10,293
  10,859
  11,451
Earnings before tax, $m
  -54
  481
  1,042
  1,631
  2,247
  2,891
  3,562
  4,263
  4,994
  5,755
  8,152
  8,979
  9,840
  10,738
  11,675
  12,652
  13,673
  14,739
  15,853
  17,017
  18,236
  19,511
  20,846
  22,245
  23,711
  25,247
  26,858
  28,548
  30,322
  32,183
Tax expense, $m
  0
  130
  281
  440
  607
  780
  962
  1,151
  1,348
  1,554
  2,201
  2,424
  2,657
  2,899
  3,152
  3,416
  3,692
  3,979
  4,280
  4,595
  4,924
  5,268
  5,628
  6,006
  6,402
  6,817
  7,252
  7,708
  8,187
  8,689
Net income, $m
  -54
  351
  761
  1,191
  1,640
  2,110
  2,601
  3,112
  3,645
  4,201
  5,951
  6,554
  7,183
  7,839
  8,523
  9,236
  9,981
  10,759
  11,572
  12,423
  13,312
  14,243
  15,218
  16,239
  17,309
  18,430
  19,606
  20,840
  22,135
  23,493

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  28,648
  31,705
  34,908
  38,256
  41,750
  45,391
  49,180
  53,121
  57,218
  61,475
  65,899
  70,497
  75,277
  80,246
  85,415
  90,793
  96,393
  102,225
  108,303
  114,640
  121,250
  128,148
  135,351
  142,874
  150,736
  158,954
  167,549
  176,540
  185,950
  195,799
Adjusted assets (=assets-cash), $m
  28,648
  31,705
  34,908
  38,256
  41,750
  45,391
  49,180
  53,121
  57,218
  61,475
  65,899
  70,497
  75,277
  80,246
  85,415
  90,793
  96,393
  102,225
  108,303
  114,640
  121,250
  128,148
  135,351
  142,874
  150,736
  158,954
  167,549
  176,540
  185,950
  195,799
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  21,377
  23,658
  26,049
  28,547
  31,155
  33,871
  36,699
  39,640
  42,697
  45,874
  49,175
  52,606
  56,172
  59,881
  63,738
  67,751
  71,930
  76,282
  80,817
  85,546
  90,479
  95,626
  101,001
  106,615
  112,481
  118,614
  125,028
  131,737
  138,758
  146,108
Working capital, $m
  -1,345
  -1,488
  -1,639
  -1,796
  -1,960
  -2,131
  -2,309
  -2,494
  -2,686
  -2,886
  -3,094
  -3,309
  -3,534
  -3,767
  -4,010
  -4,262
  -4,525
  -4,799
  -5,084
  -5,382
  -5,692
  -6,016
  -6,354
  -6,707
  -7,076
  -7,462
  -7,865
  -8,288
  -8,729
  -9,192
Total debt, $m
  21,555
  24,227
  27,026
  29,953
  33,007
  36,189
  39,501
  42,945
  46,525
  50,246
  54,113
  58,132
  62,309
  66,652
  71,169
  75,870
  80,764
  85,862
  91,174
  96,712
  102,490
  108,519
  114,814
  121,389
  128,260
  135,443
  142,955
  150,813
  159,037
  167,645
Total liabilities, $m
  25,038
  27,710
  30,509
  33,436
  36,490
  39,672
  42,984
  46,428
  50,008
  53,729
  57,596
  61,615
  65,792
  70,135
  74,652
  79,353
  84,247
  89,345
  94,657
  100,195
  105,973
  112,002
  118,297
  124,872
  131,743
  138,926
  146,438
  154,296
  162,520
  171,128
Total equity, $m
  3,610
  3,995
  4,398
  4,820
  5,261
  5,719
  6,197
  6,693
  7,209
  7,746
  8,303
  8,883
  9,485
  10,111
  10,762
  11,440
  12,146
  12,880
  13,646
  14,445
  15,278
  16,147
  17,054
  18,002
  18,993
  20,028
  21,111
  22,244
  23,430
  24,671
Total liabilities and equity, $m
  28,648
  31,705
  34,907
  38,256
  41,751
  45,391
  49,181
  53,121
  57,217
  61,475
  65,899
  70,498
  75,277
  80,246
  85,414
  90,793
  96,393
  102,225
  108,303
  114,640
  121,251
  128,149
  135,351
  142,874
  150,736
  158,954
  167,549
  176,540
  185,950
  195,799
Debt-to-equity ratio
  5.970
  6.060
  6.140
  6.210
  6.270
  6.330
  6.370
  6.420
  6.450
  6.490
  6.520
  6.540
  6.570
  6.590
  6.610
  6.630
  6.650
  6.670
  6.680
  6.700
  6.710
  6.720
  6.730
  6.740
  6.750
  6.760
  6.770
  6.780
  6.790
  6.800
Adjusted equity ratio
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126
  0.126

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -54
  351
  761
  1,191
  1,640
  2,110
  2,601
  3,112
  3,645
  4,201
  5,951
  6,554
  7,183
  7,839
  8,523
  9,236
  9,981
  10,759
  11,572
  12,423
  13,312
  14,243
  15,218
  16,239
  17,309
  18,430
  19,606
  20,840
  22,135
  23,493
Depreciation, amort., depletion, $m
  2,701
  2,818
  2,940
  3,068
  3,202
  3,341
  3,486
  3,637
  3,794
  3,957
  2,522
  2,698
  2,881
  3,071
  3,269
  3,474
  3,689
  3,912
  4,144
  4,387
  4,640
  4,904
  5,180
  5,467
  5,768
  6,083
  6,412
  6,756
  7,116
  7,493
Funds from operations, $m
  2,647
  3,169
  3,701
  4,259
  4,842
  5,452
  6,087
  6,749
  7,439
  8,158
  8,473
  9,252
  10,064
  10,910
  11,791
  12,711
  13,670
  14,671
  15,717
  16,810
  17,952
  19,147
  20,397
  21,706
  23,077
  24,513
  26,018
  27,596
  29,251
  30,986
Change in working capital, $m
  -137
  -143
  -150
  -157
  -164
  -171
  -178
  -185
  -192
  -200
  -208
  -216
  -224
  -233
  -243
  -252
  -263
  -274
  -285
  -297
  -310
  -324
  -338
  -353
  -369
  -386
  -403
  -422
  -442
  -462
Cash from operations, $m
  2,783
  3,313
  3,852
  4,416
  5,006
  5,623
  6,265
  6,934
  7,632
  8,358
  8,681
  9,468
  10,288
  11,143
  12,034
  12,963
  13,933
  14,945
  16,002
  17,107
  18,262
  19,471
  20,735
  22,059
  23,446
  24,899
  26,422
  28,018
  29,692
  31,448
Maintenance CAPEX, $m
  -985
  -1,096
  -1,213
  -1,336
  -1,464
  -1,598
  -1,737
  -1,882
  -2,033
  -2,190
  -2,352
  -2,522
  -2,698
  -2,881
  -3,071
  -3,269
  -3,474
  -3,689
  -3,912
  -4,144
  -4,387
  -4,640
  -4,904
  -5,180
  -5,467
  -5,768
  -6,083
  -6,412
  -6,756
  -7,116
New CAPEX, $m
  -2,167
  -2,281
  -2,390
  -2,499
  -2,607
  -2,717
  -2,828
  -2,941
  -3,057
  -3,177
  -3,301
  -3,431
  -3,566
  -3,708
  -3,857
  -4,014
  -4,178
  -4,352
  -4,535
  -4,729
  -4,933
  -5,148
  -5,375
  -5,614
  -5,867
  -6,133
  -6,414
  -6,709
  -7,021
  -7,350
Cash from investing activities, $m
  -3,152
  -3,377
  -3,603
  -3,835
  -4,071
  -4,315
  -4,565
  -4,823
  -5,090
  -5,367
  -5,653
  -5,953
  -6,264
  -6,589
  -6,928
  -7,283
  -7,652
  -8,041
  -8,447
  -8,873
  -9,320
  -9,788
  -10,279
  -10,794
  -11,334
  -11,901
  -12,497
  -13,121
  -13,777
  -14,466
Free cash flow, $m
  -368
  -65
  248
  582
  935
  1,308
  1,700
  2,112
  2,542
  2,991
  3,027
  3,515
  4,024
  4,554
  5,106
  5,681
  6,280
  6,904
  7,555
  8,234
  8,943
  9,683
  10,457
  11,266
  12,112
  12,998
  13,925
  14,897
  15,915
  16,983
Issuance/(repayment) of debt, $m
  2,513
  2,672
  2,800
  2,927
  3,054
  3,182
  3,312
  3,444
  3,580
  3,721
  3,867
  4,018
  4,177
  4,343
  4,518
  4,701
  4,894
  5,098
  5,312
  5,538
  5,777
  6,029
  6,295
  6,575
  6,871
  7,183
  7,512
  7,858
  8,224
  8,608
Issuance/(repurchase) of shares, $m
  413
  34
  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  
  2,926
  2,706
  2,800
  2,927
  3,054
  3,182
  3,312
  3,444
  3,580
  3,721
  3,867
  4,018
  4,177
  4,343
  4,518
  4,701
  4,894
  5,098
  5,312
  5,538
  5,777
  6,029
  6,295
  6,575
  6,871
  7,183
  7,512
  7,858
  8,224
  8,608
Total cash flow (excl. dividends), $m
  2,558
  2,641
  3,048
  3,508
  3,989
  4,490
  5,012
  5,556
  6,122
  6,712
  6,893
  7,534
  8,201
  8,897
  9,624
  10,382
  11,174
  12,001
  12,867
  13,772
  14,720
  15,712
  16,752
  17,841
  18,983
  20,181
  21,437
  22,755
  24,139
  25,591
Retained Cash Flow (-), $m
  -413
  -385
  -404
  -422
  -440
  -459
  -477
  -497
  -516
  -536
  -557
  -579
  -602
  -626
  -651
  -678
  -706
  -735
  -766
  -798
  -833
  -869
  -908
  -948
  -991
  -1,036
  -1,083
  -1,133
  -1,186
  -1,241
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
  2,145
  2,256
  2,644
  3,086
  3,549
  4,031
  4,535
  5,059
  5,606
  6,176
  6,336
  6,954
  7,599
  8,271
  8,972
  9,704
  10,468
  11,267
  12,101
  12,974
  13,887
  14,843
  15,844
  16,893
  17,993
  19,145
  20,354
  21,622
  22,953
  24,350
Discount rate, %
  12.20
  12.81
  13.45
  14.12
  14.83
  15.57
  16.35
  17.17
  18.02
  18.93
  19.87
  20.87
  21.91
  23.00
  24.16
  25.36
  26.63
  27.96
  29.36
  30.83
  32.37
  33.99
  35.69
  37.47
  39.35
  41.31
  43.38
  45.55
  47.83
  50.22
PV of cash for distribution, $m
  1,912
  1,772
  1,811
  1,819
  1,777
  1,692
  1,571
  1,425
  1,262
  1,091
  863
  715
  578
  456
  349
  261
  189
  133
  91
  60
  38
  24
  14
  8
  4
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  93.4
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9
  92.9

Caesars Entertainment Corporation is a holding company. The Company provides casino-entertainment and hospitality services. The Company's segments include Caesars Entertainment Resort Properties, LLC (CERP), Caesars Growth Partners, LLC (CGP) and Other. The Company's resorts operate primarily under the Harrah's, Caesars and Horseshoe brand names. The Company also owns the London clubs international family of casinos. The Company's facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. As of July 14, 2017, the Company through its subsidiaries, operates 47 casinos in 13 states and five countries. As of December 31, 2016, CERP owned six casinos in the United States and The LINQ promenade along with leasing Octavius Tower at Caesars Palace Las Vegas (Octavius Tower) to Caesars Entertainment Operating Company (CEOC) and gaming space at The LINQ promenade to CGP.

FINANCIAL RATIOS  of  Caesars Entertainment Corporation (CZR)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 0.3
Price to Book -0.4
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 3.5
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 $8391 million for the last fiscal year's total revenue generated by Caesars Entertainment Corporation. The default revenue input number comes from 0001 income statement of Caesars Entertainment Corporation. 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 11.3% 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 12.2%, whose default value for CZR is calculated based on our internal credit rating of Caesars Entertainment Corporation, 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 Corporation.
    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 36.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4673 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 7.2% for Caesars Entertainment Corporation.

Corporate tax rate of 27% is the nominal tax rate for Caesars Entertainment Corporation. 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 228.9%.

Life of production assets of 19.5 years is the average useful life of capital assets used in Caesars Entertainment Corporation 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 -14.4%. 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 - $3250 million for Caesars Entertainment Corporation - 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 669.554 million for Caesars Entertainment Corporation 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 Corporation at the current share price and the inputted number of shares is $5.8 billion.

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