Boyd Gaming Corporation (BYD - Free Report) is poised to benefit from online betting offerings, FanDuel Group partnership and portfolio expansion. Also, increased focus on interactive gaming platform bodes well. In the past three months, shares of the company have increased 31.8% compared with the industry’s 11.5% growth. However, dismal traffic due to the coronavirus pandemic remains a concern.
Let us delve deeper into factors highlighting why investors should hold on to the stock for the time being.
Factors Likely to Drive Growth
Boyd Gaming continues to take initiatives to expand its online betting offerings. During the second quarter of 2020, the company continued to expand its partnership with FanDuel Group, which includes retail sports books at seven Boyd properties, mobile sports betting apps in Pennsylvania and Indiana as well as the online gaming site in Pennsylvania. With new opportunities opening up in states such as Illinois, the partnership is likely to extend in times ahead.
Moreover, the company has been benefitting from its increased focus on interactive gaming platform. So far this year, interactive gaming revenues in New Jersey and Pennsylvania have totaled more than $500 million and $250 million, respectively. During the second quarter, the company launched Stardust brand and social casino to boost presence in the interactive gaming platform. Thanks to the strategic partnership with FanDuel, the company is optimistic about its future in the iGaming industry.
Meanwhile, the company continues to expand its portfolio by strengthening current operations and growing through capital investment as well as other strategic measures. The company extensively depends on acquisitions as a strategy to expand its brand presence.
Nevertheless, the company stated that it has enough liquidity to survive a zero-revenue scenario for 19 months. At the end of second-quarter 2020, Boyd Gaming had cash and cash equivalents of $1.31 billion, significantly up from $0.8 billion as on Mar 31, 2020. The increase reflects $670.0 million drawn from the company's revolving credit facilities as well as $600 million of 8.625% senior notes (due 2025) issued on May 21, 2020. Although the company’s long-term debt at the end of second-quarter 2020 stood at $4.9 billion compared with $4.4 billion as of Mar 31, 2020, the company had a debt-to-capital ratio of 0.8, indicating a manageable debt level.
Boyd Gaming’s financials in 2020 are likely to be impacted by the coronavirus outbreak. Even though the company has 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 has not only suspended its share repurchase programs but has also withdrawn its 2020 guidance.
Meanwhile, heightened competition with new entries in the already high-supply market remains a headwind for the company.
Boyd Gaming, which shares space with Red Rock Resorts, Inc. (RRR - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) 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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