Yahoo Finance Here's Why Investors Should Retain Boyd Gaming (BYD) Stock
Boyd Gaming Corporation BYD is likely to benefit from the expansion of online betting offerings, FanDuel partnership and interactive gaming platform. Emphasis on strengthening current operations through capital investments (in land-based and online operations) bodes well. However, coronavirus-induced uncertainties and higher costs are a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Factors Driving Growth
Boyd Gaming’s efforts to expand online betting offerings buoy optimism. During fourth-quarter 2021, the company opened FanDuel Sportsbooks at its Louisiana properties and launched mobile sports betting in the region. Going forward, the company is optimistic about online gaming prospects in Ohio. It anticipates launching FanDuel retail and mobile sportsbooks in the state by 2022-end. Given a high promotional capital-intensive and competitive landscape, we believe that partnership with FanDuel is likely to drive positive cash flows in the upcoming periods. This and the legalization of sports betting in additional states are likely to add to the positives.
Since the coronavirus outbreak, Boyd Gaming has been witnessing a solid performance by its interactive gaming platform. Thanks to its strategic partnership with FanDuel, the company is optimistic regarding its future in the iGaming industry. Given the growth opportunities related to the expansion in new markets and digital opportunities in online casino gaming, the company anticipates EBITDAR (from its online operations) to exceed $30 million in 2022.
During first-quarter 2022, the company announced the acquisition of Pala Interactive to boost its online gaming strategy. Backed by the latter’s technology (featuring a player account management system and iGaming products) and its operational and marketing expertise, the initiative allows the company to fortify its position in the emerging iGaming opportunity. The company anticipates closing the deal by first-quarter 2023.
Boyd Gaming focuses on expanding its portfolio by strengthening current operations and growing through capital investment and other strategic measures. The company extensively depends on acquisitions as a strategy to expand its brand presence. Currently, the company is working on the Sky River Casino site. The resort comprises 2,000 slot machines, 80 table games and 17 food and beverage offerings. With steel in ground, the company expects to open doors by fourth-quarter 2022. The company is evaluating opportunities to reinvest in its existing operations from its regional portfolio. To this end, it has started to plan the development of a land-based facility at Treasure Chest. The company intends to begin construction in the summer of 2022 and complete it by late 2023. It emphasized on enhancing its gaming and non-gaming offerings to boost the guest experience of this property.
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In the past year, shares of Boyd Gaming have declined 11% compared with the industry’s fall of 51.2%.
Concerns
Although most of the properties have reopened, potential resurgences or new variants of the virus might hurt the company in the upcoming periods. Since the pandemic’s severity, duration and impact cannot be ascertained, the possibility of additional business disruptions, lower customer traffic and reduced operations cannot be ruled out.
Despite several margin-enhancing initiatives in place, Boyd Gaming has been grappling with higher expenses across gaming, food and beverage, room, and other offerings. The company witnessed high SG&A costs in first-quarter 2022. Total operating costs and expenses in first-quarter 2022 increased 9% year over year to $609.7 million. For 2022, the company anticipates operating expenses to remain elevated owing to a rise in minimum wage rates and utility costs.
Zacks Rank & Key Picks
Boyd Gaming currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation BVH, Funko, Inc. FNKO and Civeo Corporation CVEO.
Bluegreen Vacations sports a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has increased 20.1% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period’s reported levels.
Funko sports a Zacks Rank #1. FNKO has a trailing four-quarter earnings surprise of 78.7%, on average. Shares of the company have declined 23.1% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 26.8% and 31%, respectively, from the year-ago period’s reported levels.
Civeo sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,565.1%, on average. Shares of the company have increased 71.3% in the past year.
The Zacks Consensus Estimate for CVEO’s 2022 sales and EPS suggests growth of 12.5% and 1,450%, respectively, from the year-ago period’s levels.
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