We recently compiled a list of the 10 Best Entertainment Stocks To Buy According to Analysts. In this article, we are going to take a look at where Caesars Entertainment, Inc. (NASDAQ:CZR) stands against the other best entertainment stocks to buy according to analysts.
An Overview of the Entertainment Industry
According to a report by The Business Research Company, the international entertainment and media industry was valued at $2.51 trillion in 2023. It is expected to grow at a compound annual growth rate (CAGR) of 7% to reach $3.55 trillion by 2028. Growth in the entertainment industry is driven by the rapid adoption of subscription models, the evolution of live events, and the use of augmented and virtual reality technologies.
READ ALSO: 11 Best Aerospace and Defense Stocks to Buy Right Now and 11 Best Computer Hardware Stocks to Invest in Right Now.
A report published by FTI Delta earlier this year highlighted some significant trends and challenges in the media and entertainment industry. As per the report, the live entertainment sector has experienced a robust recovery, with global spending on live music in 2023 increasing by 49% compared to 2019. Major sports leagues, including the NFL, NBA, MLS, NHL, and IndyCar, have not only recovered but surpassed pre-pandemic attendance levels. The post-pandemic recovery within the industry has not been uniform. For instance, the filmed entertainment industry faced severe challenges in late 2023 due to strikes by the Writers Guild of America (WGA) and SAG-AFTRA. These disruptions led to a more than 70% decline in production and marketing expenditures, compounding existing issues from early 2023 when studios were already tightening budgets. As a result, spending in 2023 was down approximately 35% from 2022, reflecting a struggling market. The report anticipates recovery for filmed entertainment post-strike to be more subdued than previous rebounds, with projections of about 25% year-over-year growth in 2024.
On the bright side, the report highlighted a significant growth trajectory for United States TV and connected TV (CTV) advertising, emphasizing the transformative impact of CTV on the advertising landscape. The combined US TV and CTV ad spending is projected to approach $100 billion by 2027, with CTV being the primary driver of this growth. In 2024 alone, CTV advertising is expected to increase by $5.5 billion, representing a 22% year-over-year growth. The surge in CTV advertising is largely attributed to the rise of premium ad-supported streaming services.
In addition to a robust performance expected within the advertising segment, the gaming sector remains resilient. The video game industry achieved a CAGR of 9.2% from 2019 to 2022. Despite a 6.3% decline from the peak surge during the COVID-19 pandemic, console sales in 2022 remained 18% higher than pre-pandemic levels, indicating strong ongoing demand for gaming hardware. As per the report, the overall outlook for the video game market remains positive, with expectations of above mid-single-digit growth throughout the next year.
A luxurious casino entrance surrounded by lush landscaping and vibrant lights.
Our Methodology
To compile the list of the 10 best entertainment stocks to buy according to analysts, we used the Finviz stock screener and our previous articles. Using these two sources we aggregated an initial list of entertainment stocks sorted by their market capitalization. Next, we checked analysts’ upside potential for each stock and shortlisted stocks with an analyst upside potential of at least 25%. Lastly, we ranked our stocks in ascending order of the analysts’ upside potential. We have also added the number of hedge funds holding each stock sourced from Insider Monkey’s Q3 2024 database. Please note that the data was collected on December 13, 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Caesars Entertainment, Inc. (NASDAQ:CZR)
Analysts’ Upside Potential: 41.85%
Number of Hedge Funds: 67
Caesars Entertainment, Inc. (NASDAQ:CZR) is a major company in the casino and entertainment industry in the United States. It owns and operates over 50 casinos across the United States, primarily under well-known brands like Caesars, Harrah’s, and Horseshoe. The company runs hotels connected to its casinos, providing approximately 44,900 hotel rooms. It also hosts numerous live events such as concerts and shows at its properties, enhancing the overall guest experience beyond just gaming.
In the third quarter of 2024, Caesars Digital, the online gaming and sports betting division of Caesars Entertainment, Inc. (NASDAQ:CZR), showcased growth and performance. The segment reported $303 million in net revenues, marking a 41% increase compared to the same quarter last year. This reflects a strong demand for digital gaming and sports betting services. The segment also achieved a record adjusted EBITDA of $52 million, a significant rise from just $2 million in Q3 2023.
Moreover, within the digital segment, the Caesars Palace app has been growing as a key contributor to overall iCasino revenues, highlighting the effectiveness of its mobile strategy. Caesars Entertainment, Inc. (NASDAQ:CZR) has launched the Horseshoe Casino brand in multiple states including Michigan, Pennsylvania, and West Virginia, with plans to expand into Ontario and New Jersey by year-end. It is one of the best entertainment stocks according to analysts.
Choice Equities Capital Management stated the following regarding Caesars Entertainment, Inc. (NASDAQ:CZR) in its Q3 2024 investor letter:
“Caesars Entertainment, Inc. (NASDAQ:CZR) and GENI – Both Caesars Entertainment, Inc. and Genius Sports Limited operate in and around the entertainment, casino and gaming space. Caesars is a bit more well-known and discussed in brief below. Caesars Entertainment is the owner of a strong casino and entertainment brand, with a diverse portfolio of properties strategically focused on both physical and digital growth. The company’s leadership in the U.S. casino and resort industry is underpinned by its expansive footprint, including marquee properties on the Las Vegas strip, new and existing regional casinos in growing markets, and its growing Caesars Sportsbook platform. With the ongoing recovery in leisure and travel post-pandemic, combined with the secular tailwinds in online sports betting and iGaming, Caesars is well-positioned to capture growth across multiple segments. Recently emerging from a sizeable multi-year investment cycle, shares of Caesars look attractive on a mid-teens yield of forward cash-flows. Some recent refinancings and a share buyback highlight the improved look of the company’s financials.”
Overall, CZR ranks 4th on our list of best entertainment stocks to buy according to analysts. While we acknowledge the potential of CZR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CZR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
