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Why Is Boyd (BYD) Down 7.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Boyd Gaming (BYD). Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Boyd due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Boyd Gaming Q1 Earnings Top Estimates, Increase Y/Y

Boyd Gaming reported solid first-quarter 2022 results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year. Both the metrics surpassed their respective consensus mark for the eighth straight quarter.

Earnings and Revenues

In the quarter under review, adjusted earnings per share were $1.40, outpacing the Zacks Consensus Estimate of $1.24 by 12.9%. The metric increased from 93 cents reported in the prior-year quarter.

Total revenues of $860.7 million beat the consensus mark of $835 million by 2.9%. The top line increased 14.3% on a year-over-year basis. The upside was primarily backed by a streamlined cost structure, improved visitation and solid customer trends (rated guest counts, frequency and spending).

Total adjusted EBITDAR during the reported quarter amounted to $338.8 million compared with $292.6 million reported in the prior-year quarter. Companywide adjusted EBITDAR margins (after corporate expenses) came in at 39.4%, up from 38.8% reported in the year-ago quarter.

Segmental Detail

Las Vegas Locals

During first-quarter 2022, revenues in the segment amounted to $227.6 million, up 24.7% year over year. The segment’s adjusted EBITDAR totaled $118.7 million, up 30.9% from $90.6 million reported in the year-ago quarter’s levels.

Downtown Las Vegas

During the quarter, revenues in the segment rallied 130.9% from the prior-year quarter’s figure to $49.5 million. Adjusted EBITDAR was $18.4 million compared with $2.4 million reported in the year-ago quarter.

Midwest and South Segment

During the first quarter, revenues in the segment increased 6.2% year over year to $583.7 million. Adjusted EBITDAR amounted to $223.5 million, up 2.4% from $218.1 million reported in the year-ago quarter.

Operating Highlights

During first-quarter 2022, the company’s total operating costs and expenses came in at $609.7 million compared with $559.6 million reported in the year-ago quarter. During the quarter, selling, distribution and administration expenses came in at $92 million compared with $90 million reported in the prior-year quarter.

Balance Sheet

As of Mar 31, 2022, the company had cash on hand of $403 million compared with $344.6 million as of Dec 31, 2021. Total debt during first-quarter 2022 amounted to $3.1 billion, in line with the previous quarter’s levels.

During the quarter, the company repurchased $132 million worth of stock under its authorized $300 million repurchase program. As of Mar 31, the company stated the availability of approximately $149 million under its repurchase program.

The company announced a hike in its quarterly dividend payout. Boyd Gaming raised its quarterly dividend by 114.3%, indicating its intention to utilize free cash for boosting shareholders’ returns. The company raised the quarterly dividend to 15 cents per share (or 90 cents annually) from the previous payout of 7 cents (or 28 cents annually). The hiked dividend will be paid out on Apr 15, 2022, to shareholders on record as of Mar 15, 2022.

Other Updates

During the quarter, 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) as well as its operational and marketing expertise, the initiative allows the company to advance its position with respect to the emerging iGaming opportunity. The company anticipates closing the deal by first-quarter 2023.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 5.3% due to these changes.

VGM Scores

Currently, Boyd has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Boyd has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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