Boyd Gaming Corporation (BYD - Free Report) is benefiting from Las Vegas operations, the FanDuel partnership and the Pala Interactive acquisition. Consequently, the stock has gained 16.7% in the past six months compared with the industry’s growth of 21.8%. However, high costs and intense competition are concerning.
Let’s delve deeper.
Growth Drivers
Boyd Gaming considers the local market in Las Vegas as a major driver for its portfolios. During first-quarter 2023, it reported impressive customer trends with respect to guest counts, frequency and spending.
During the quarter, the Las Vegas segment’s revenues and EBITDAR increased nearly 6% each, year over year. Operating margin was 52.5%. Backed by demand from out-of-town guests, BYD reported a rise in non-gaming revenues. Also, an increase in Hawaiian visitation added to the positives.
Boyd Gaming has also been undertaking efforts to expand online betting offerings. One of the notable initiatives by the company has been regarding the legalization of sports gambling.
During fourth-quarter 2022, BYD made progress in advancing its online strategy by completing the acquisition of Pala Interactive for $170 million. Also, it expanded its partnership with Fan Duel by launching mobile and retail sports betting in Kansas and Ohio. Given the Pala interactive’s technology (featuring a player account management system and iGaming products), and operational and marketing expertise, Boyd Gaming is optimistic in this regard and anticipates the initiative to advance its position in the emerging iGaming market.
In 2020, online gaming contributed more than $10 million in EBITDAR due to FanDuel's mobile sports operation in Pennsylvania, Illinois, Indiana, Iowa and Mississippi. During first-quarter 2023, EBITDAR in online segment was approximately $21 million, reflecting twofold growth on a year-over-year basis. The upside was backed by online gaming launch in Ohio and Kansas, continued growth in existing markets and the addition of Boyd Interactive.
Given a high promotional capital-intensive and competitive landscape, we believe that partnership with FanDuel is likely to drive cash flows in the upcoming periods.
Concerns
Despite several margin-enhancing initiatives, Boyd Gaming has been grappling with higher expenses across food and beverage. During the first quarter, food and beverage expenses were $59.3 million compared with $53.9 million reported in the prior-year quarter. Total operating costs and expenses were $679.1 million compared with $609.7 million reported in the year-ago quarter.
Boyd Gaming is persistently facing intense competition from various casinos, hotels, gaming services, non-gaming resorts and vacation destinations. Evidently, its operations are witnessing heightened competition with new entries in the already high-supply market.
Zacks Rank & Key Picks
Boyd Gaming currently carries a Zacks Rank #3 (Hold).
Here we present some better-ranked stocks from the Zacks Consumer Discretionary sector.
Royal Caribbean Cruises Ltd. (RCL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The stock has increased 31.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 48.3% and 160.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) currently flaunts a Zacks Rank #1. SKX has a trailing four-quarter earnings surprise of 18.8%, on average. The stock has improved 31% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates gains of 7.8% and 31.9%, respectively, from the year-ago period’s levels.
Crocs, Inc. (CROX - Free Report) presently carries a Zacks Rank #2 (Buy). CROX has a trailing four-quarter earnings surprise of 19.6%, on average. The stock has gained 9.2% in the past six months.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates rises of 13.2% and 5.7%, respectively, from the year-ago period’s levels.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
Boyd Gaming Corporation (BYD - Free Report) is benefiting from Las Vegas operations, the FanDuel partnership and the Pala Interactive acquisition. Consequently, the stock has gained 16.7% in the past six months compared with the industry’s growth of 21.8%. However, high costs and intense competition are concerning.
Let’s delve deeper.
Growth Drivers
Boyd Gaming considers the local market in Las Vegas as a major driver for its portfolios. During first-quarter 2023, it reported impressive customer trends with respect to guest counts, frequency and spending.
During the quarter, the Las Vegas segment’s revenues and EBITDAR increased nearly 6% each, year over year. Operating margin was 52.5%. Backed by demand from out-of-town guests, BYD reported a rise in non-gaming revenues. Also, an increase in Hawaiian visitation added to the positives.
Boyd Gaming has also been undertaking efforts to expand online betting offerings. One of the notable initiatives by the company has been regarding the legalization of sports gambling.
During fourth-quarter 2022, BYD made progress in advancing its online strategy by completing the acquisition of Pala Interactive for $170 million. Also, it expanded its partnership with Fan Duel by launching mobile and retail sports betting in Kansas and Ohio. Given the Pala interactive’s technology (featuring a player account management system and iGaming products), and operational and marketing expertise, Boyd Gaming is optimistic in this regard and anticipates the initiative to advance its position in the emerging iGaming market.
In 2020, online gaming contributed more than $10 million in EBITDAR due to FanDuel's mobile sports operation in Pennsylvania, Illinois, Indiana, Iowa and Mississippi. During first-quarter 2023, EBITDAR in online segment was approximately $21 million, reflecting twofold growth on a year-over-year basis. The upside was backed by online gaming launch in Ohio and Kansas, continued growth in existing markets and the addition of Boyd Interactive.
Given a high promotional capital-intensive and competitive landscape, we believe that partnership with FanDuel is likely to drive cash flows in the upcoming periods.
Concerns
Despite several margin-enhancing initiatives, Boyd Gaming has been grappling with higher expenses across food and beverage. During the first quarter, food and beverage expenses were $59.3 million compared with $53.9 million reported in the prior-year quarter. Total operating costs and expenses were $679.1 million compared with $609.7 million reported in the year-ago quarter.
Boyd Gaming is persistently facing intense competition from various casinos, hotels, gaming services, non-gaming resorts and vacation destinations. Evidently, its operations are witnessing heightened competition with new entries in the already high-supply market.
Zacks Rank & Key Picks
Boyd Gaming currently carries a Zacks Rank #3 (Hold).
Here we present some better-ranked stocks from the Zacks Consumer Discretionary sector.
Royal Caribbean Cruises Ltd. (RCL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The stock has increased 31.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates growth of 48.3% and 160.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) currently flaunts a Zacks Rank #1. SKX has a trailing four-quarter earnings surprise of 18.8%, on average. The stock has improved 31% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates gains of 7.8% and 31.9%, respectively, from the year-ago period’s levels.
Crocs, Inc. (CROX - Free Report) presently carries a Zacks Rank #2 (Buy). CROX has a trailing four-quarter earnings surprise of 19.6%, on average. The stock has gained 9.2% in the past six months.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates rises of 13.2% and 5.7%, respectively, from the year-ago period’s levels.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
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