Here's Why Investors Should Retain Boyd Gaming Stock Now
Boyd Gaming Corporation BYD is likely to benefit from Las Vegas operations, expansion initiatives and igaming prospects. Its commitment to returning value to shareholders bodes well. However, elevated expenses is a concern.
Factors Driving BYD Stock
Boyd Gaming considers the local market in Las Vegas a major driver for its portfolios. During the second quarter of 2024, Boyd Gaming's Las Vegas Locals segment reported notable growth in market share. The company reported encouraging customer trends with non-gaming revenues from food, beverage and hotel operations increasing nearly 6% year over year. In Downtown Las Vegas, the company reported improved visitation driven by the recovery of Hawaiian visitors and normalized airfares. Boyd’s investments in renovating and expanding Fremont Street properties have paid off, contributing to robust year-over-year growth in the segment.
Boyd Gaming’s commitment to reinvesting in its properties and expanding its portfolio bodes well. The company’s opening of the Treasure Chest, a land-based casino, has been met with strong demand, positioning it for sustained growth in the region. BYD is moving forward with strategic projects, such as the expansion of the Ameristar St. Charles property in Missouri and the development of the Cadence Crossing Casino in Southern Nevada. Both projects are expected to generate long-term revenue growth, with completion timelines set for the next two years.
Boyd Gaming’s Online segment continues to show impressive results, particularly through its successful partnership with FanDuel. The company is increasing its expectations for the Online segment’s EBITDAR from $65 million to $70 million for the full year, underscoring the strength of its digital betting and gaming strategy. Boyd’s 5% equity stake in FanDuel has proven to be a valuable asset, offering long-term upside as the U.S. sports betting market expands.
One of the strongest reasons to retain Boyd Gaming stock is its prudent capital management and commitment to shareholder returns. The company repurchased $176 million in stock during the second quarter, part of its $100 million-per-quarter share repurchase program. Combined with a quarterly dividend (of $0.17 per share), BYD has returned $313 million to shareholders in the first half of 2024. The company anticipates to return approximately $550 million in 2024 by means of share repurchases with its dividend program.
Concerns for BYD Stock
Image Source: Zacks Investment Research
In the past year, the stock has declined 7.1% against the industry’s 15.9% growth. The downside can be attributed to a volatile macro environment.
Boyd Gaming has been grappling with higher expenses across gaming, food and beverage, room and other offerings. During the first six months of 2024, food & beverage, room, online as well as selling, general and administrative expenses increased year over year to $125.1 million, $38.1 million, $238.2 million and $213.3 million from $118 million, $35.7 million, $173.4 million and $199.4 million, respectively. Total operating costs and expenses during the same time frame increased to $1.48 billion from $1.35 billion reported in the prior year.
Going forward, the company intends to monitor the economic situation to gauge the impacts of interest rate hikes and inflationary pressures. Cost pressures are likely to moderate in 2024 but stay for some time, as stated by the company.
Conclusion
Boyd Gaming's stock appears favorable given the company's robust performance in Las Vegas, strategic expansion plans and successful online ventures. BYD's commitment to returning value to its shareholders through dividends and share repurchases, coupled with its ability to drive growth in key segments, strengthens its investment appeal. While elevated expenses and recent stock declines amid economic volatility present concerns, the company's proactive approach to managing costs and expanding its portfolio suggests a promising long-term outlook. Investors should consider holding onto BYD stock.
Zacks Rank & Key Picks
Boyd Gaming currently carries a Zacks Rank #3 (Hold).
Some top-ranked stocks in the Zacks Consumer Discretionary sector are Royal Caribbean Cruises Ltd. RCL, DoubleDown Interactive Co., Ltd. DDI and Monarch Casino & Resort, Inc. MCRI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Caribbean Cruises has a trailing four-quarter earnings surprise of 18.5%, on average. The stock has rallied 59.9% in the past year. The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) calls for growth of 18.1% and 71.1%, respectively, from the year-ago levels.
DoubleDown Interactive has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has surged 44.7% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Monarch Casino & Resort has a trailing four-quarter negative earnings surprise of 3.5%, on average. The stock has increased 16.4% in the past year. The Zacks Consensus Estimate for MCRI’s 2024 sales and EPS indicates an increase of 2.3% and 10%, respectively, from the year-ago levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
Monarch Casino & Resort, Inc. (MCRI) : Free Stock Analysis Report
DoubleDown Interactive Co., Ltd. Sponsored ADR (DDI) : Free Stock Analysis Report