Prospects brighten for big casino operator

Tuesday, April 11, 2000 | 11:11 a.m.

Park Place Entertainment Corp. shares could be poised to rise as some big investors are paying above the prevailing market price on expectations cash flow will rise for the nation's largest casino operator, Bloomberg News reported Monday.

Park Place stock was up 57 cents this morning to $12.13. Besides the Bloomberg story, two other factors may have influenced investors this morning. Station Casinos Inc. reported record earnings and the Nevada Gaming Control Board reported strong growth in the February gaming win in Nevada and even stronger growth on the Las Vegas Strip.

Shares of Las Vegas-based Park Place had fallen about 17 percent since Oct. 25, when they touched a 52-week high of $14.

Yet institutional investors' block trades at higher prices have exceeded those at lower prices by about $106.9 million since then on expectations the company will generate more cash with its Paris Las Vegas hotel-casino and its newly acquired Caesars World casinos, Bloomberg reported.

"Business trends are good in Las Vegas. They're good in Atlantic City. They're good on the Gulf Coast," said Mark Greenberg, a fund manager at Invesco Funds Inc., which held 3.92 million Park Place shares as of December. "And there's little new competition in the markets where Park Place operates."

Park Place is likely to generate free cash flow, or earnings before depreciation and amortization, of about $400 million this year, said Deutsche Banc Alex. Brown analyst Robin Farley. That compares to negative free cash flow of about $100 million last year as cash was spent on construction of the $760 million Paris.