Noteworthy Insider Activity: Michael Pegram Invests $1.46M In Caesars Entertainment Stock

Disclosed in the latest SEC filing, a significant insider purchase on May 7, involves Michael Pegram, Director at Caesars Entertainment CZR.

What Happened: In a Form 4 filing on Tuesday with the U.S. Securities and Exchange Commission, it was disclosed that Pegram bought 40,000 shares of Caesars Entertainment, amounting to a total of $1,455,734.

In the Wednesday's morning session, Caesars Entertainment's shares are currently trading at $36.01, experiencing a down of 0.94%.

Unveiling the Story Behind Caesars Entertainment

Caesars Entertainment includes about 50 domestic gaming properties across Las Vegas (49% of 2023 EBITDAR before corporate expenses) and regional (48%) markets. Additionally, the company hosts managed properties and digital assets, the later of which produced marginal EBITDA in 2023. Caesars' US presence roughly doubled with the 2020 acquisition by Eldorado, which built its first casino in Reno, Nevada, in 1973 and expanded its presence through prior acquisitions to over 20 properties before merging with legacy Caesars. Caesars' brands include Caesars, Harrah's, Tropicana, Bally's, Isle, and Flamingo. Also, the company owns the US portion of William Hill (it sold the international operation in 2022), a digital sports betting platform.

Key Indicators: Caesars Entertainment's Financial Health

Revenue Challenges: Caesars Entertainment's revenue growth over 3 months faced difficulties. As of 31 March, 2024, the company experienced a decline of approximately -3.11%. This indicates a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Insights into Profitability:

• Gross Margin: The company shows a low gross margin of 50.91%, suggesting potential challenges in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Caesars Entertainment's EPS reflects a decline, falling below the industry average with a current EPS of -0.73.

Debt Management: Caesars Entertainment's debt-to-equity ratio is below the industry average at 2.78, reflecting a lower dependency on debt financing and a more conservative financial approach.

Evaluating Valuation:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 10.27 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: The P/S ratio of 0.69 is lower than the industry average, implying a discounted valuation for Caesars Entertainment's stock in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): The company's EV/EBITDA ratio 5.34 is below the industry average, indicating that it may be relatively undervalued compared to peers.

Market Capitalization Analysis: The company's market capitalization is above the industry average, indicating that it is relatively larger in size compared to peers. This may suggest a higher level of investor confidence and market recognition.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

Why Insider Transactions Are Key in Investment Decisions

Emphasizing the importance of a comprehensive approach, considering insider transactions is valuable, but it's crucial to evaluate them in conjunction with other investment factors.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

A Closer Look at Important Transaction Codes

When analyzing transactions, investors tend to focus on those in the open market, detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase,while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Caesars Entertainment's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.