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Are Crown Resorts shares undervalued or falling further?

The Crown Resorts Ltd (ASX: CWN) share price has had a volatile start to the year, climbing as high as $14.42 per share in early April before slumping lower in August.

But at its current $12.14 per share valuation, is the Crown share price undervalued or is it likely to fall further before the end of the year?

What’s been happening for Crown in 2019?

The Crown share price rocketed 20% to $14.05 in one day back in April as the Aussie wagering group announced it was in takeover talks with US-based Wynn Resorts.

Wynn was reportedly looking at acquiring Crown at $14.75 per share in a mixed scrip and cash bid, but those plans were quickly scuppered.

The following day, Wynn announced it was terminating discussions with Crown over what it saw as inappropriate disclosure of information and the lack of a formal bid for the company.

Billionaire owner James Packer also sold half of his $1.76 billion stake in the company in late May, which represents a significant chunk of the wagering group’s $8.2 billion market cap.

Since then, the Crown share price has slumped to just $12.14 per share, with a particularly strong sell-off in late July and early August.

Following an investigation by several prominent Australian media groups, Crown was hit with allegations of links to organised crime and illegal activity.

While the Crown share price dropped 7.7% in the two days following the airing of the report, the company hit back amid calls for a parliamentary inquiry into its activities.

Are Crown shares in the buy zone?

Despite a tumultuous 2019, Crown shares are still trading marginally higher from where they started 2019, which has been helped by a 2% recovery in August.

Crown reported its full-year results earlier this month, reporting a 5% drop in underlying full-year profit to $368 million as the company reported lower earnings in both Crown Melbourne and Crown Perth.

However, the strong sell-off in recent months could make the Crown share price a good buying opportunity in August.

Despite its problems in 2019, Crown shares are trading at 20x earnings with a near 5% per annum dividend yield, but are still in the red over both a 1-year and 5-year timeframe.

I personally think the risks may outweigh the potential upside amid the changing regulatory environment for wagering in the country, but it does remain the incumbent here in Australia with its Sydney development a potential game-changer in the next few years.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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