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Boyd Gaming (BYD) Up 40% in 3 Months: More Room to Run?

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Zacks Equity Research
·4 min read
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Boyd Gaming Corporation BYD is poised to benefit from its interactive gaming platform, FanDuel Group partnership and portfolio expansion. Also, increased focus on its online betting offerings bodes well. In the past three months, shares of the company have increased 39.9% compared with the industry’s 23.5% growth. However, dismal traffic due to the coronavirus pandemic is a concern.

Let us discuss the factors highlighting why investors should hold on to the stock for the time being.

Factors Likely to Drive Growth

Boyd Gaming’s focus on interactive gaming platform bodes well. Owing to the strategic partnership with FanDuel, the company is optimistic regarding its future in the iGaming industry. In 2020, online gaming contributed more than $10 million to EBITDAR backed by FanDuel's mobile sports operation in Pennsylvania, Illinois, Indiana, and Iowa. For 2021, the company expects EBITDAR to be more than $20 million.

During fourth-quarter 2020, the company also collaborated with Aristocrat Technologies for the roll out of a new cashless digital wallet – BoydPay, in Indiana and Ohio. Going forward, the company plans to integrate the wallet into its online products, thereby expanding the services to additional amenities and Boyd Gaming properties. Also, the company is optimistic about online gaming prospects in Louisiana, Kansas, Missouri and Ohio.

Meanwhile, the company continues to expand its portfolio by strengthening current operations and growing through capital investment as well as other strategic measures. During the fourth quarter, the company stated to have started work on Wilton Rancheria resorts that is positioned as the closest Class 3 casino to Downtown Sacramento in the South Bay area. With a tentative opening scheduled by the second half of 2022, the company is optimistic with respect to growth.

Nevertheless, the company stated that it has enough liquidity to survive a zero-revenue scenario for the next 12 months. At the end of the fourth quarter, Boyd Gaming had cash and cash equivalents of $519.2 million compared with $506 million as on Sep 30, 2020. Although, total debt during the fourth quarter amounted to $3.95 billion compared with $4.04 billion as on third-quarter 2020, the debt-to-capitalization ratio at the end of the fourth quarter came in at 0.8x, almost flat sequentially.

Concerns

Boyd Gaming’s financials in 2020 were negatively impacted by the coronavirus pandemic. Even though the company resumed operations at majority of its gaming properties, traffic is expected to be affected by the social-distancing protocols. Owing to the uncertainty of the crisis, the company suspended its share repurchase programs. Also, further chances of temporary shutdowns cannot be ruled out.

Meanwhile, heightened competition with new entries in the already high-supply market is a headwind for the company.

Boyd Gaming, which shares space with Red Rock Resorts, Inc. RRR, Wynn Resorts, Limited WYNN and Las Vegas Sands Corp. LVS in the Zacks Gaming industry, carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report

Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report

Boyd Gaming Corporation (BYD) : Free Stock Analysis Report

Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report

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