Here's Why Investor Should Retain Boyd Gaming (BYD) Stock

Zacks Equity Research

Mon, Nov 29, 2021, 6:04 AM 5 min read

Boyd Gaming Corporation BYD is likely to benefit from the expansion of online betting offerings and the FanDuel partnership. This along with a focus on the interactive gaming platform and strengthening current operations (through capital investment and other strategic measures) bodes well. So far this year, shares of Boyd Gaming have gained 42.2% against the industry’s decline of 2%. However, coronavirus-induced uncertainties and higher costs are a concern.

Let us discuss the factors highlighting why investors should retain the stock for the time being.

Factors Driving Growth

Boyd Gaming continues to gain from sports-betting expansions. During third-quarter 2019, the company partnered with FanDuel Group and opened sportsbooks at Blue Chip, Belterra Resort, Diamond Jo Dubuque and Diamond Jo Worth properties in the Midwest. It also introduced a market-leading mobile app in Pennsylvania. Courtesy of its performance in Pennsylvania and New Jersey, FanDuel launched its mobile betting app in Indiana. During third-quarter 2021, Boyd Gaming continued to expand its partnership with FanDuel Group, thereby launching mobile sports betting products in Arizona and Connecticut. The company is optimistic about online gaming prospects in Maryland, Washington State and Wyoming. It expects to launch FanDuel retail and mobile sportsbooks by 2021-end. Given a high promotional capital-intensive and competitive landscape, we believe that the FanDuel partnership is likely to generate positive cash flows in the days ahead.

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Since the the coronavirus outbreak, Boyd Gaming has been recording solid performance in the interactive gaming platform. Thanks to the partnership with FanDuel, the company is optimistic regarding its future in the iGaming industry. The company made solid progress regarding its cashless digital wallet — BoydPay. So far, it has rolled out BoydPay at 11 properties in four states. During the third quarter, the company initiated field trials for BoydPay at table games in Nevada. Also, Boyd Gaming stated that field trials in Pennsylvania are in the pipeline. The company plans to integrate the wallet into its online products, thereby expanding the services to additional amenities and Boyd Gaming properties.

The Zacks Rank #3 (Hold) company continues to expand its portfolio by strengthening current operations through capital investments and other strategic measures. Currently, the company is working on the Wilton Rancheria resorts, which is positioned as the closest Class 3 casino to Downtown Sacramento in the South Bay area. The company expects to open the property by the second half of 2022. The company made substantial progress in constructing the Sky River Casino site. The resort comprises 2,000 slot machines, 80 table games and 12 food and beverage offerings. With steel in the ground and member recruitments underway, the company expects to open doors by fourth-quarter 2022. It is evaluating opportunities to reinvest in its existing operations from the regional portfolio. To this end, Boyd Gaming is planning the development of a land-based facility at Treasure Chest. The company expects the development to enhance the guest experience of this property.

Concerns

Although most of the properties have reopened, potential resurgences or new variants of the virus might hurt the company in the upcoming periods. Since the pandemic’s severity, duration and impact cannot be ascertained, the possibility of additional business disruptions, lower customer traffic and reduced operations cannot be ruled out.

Despite several margin-enhancing initiatives in place, Boyd Gaming has been grappling with higher expenses across gaming, food and beverage, room, and other offerings. The company witnessed high SG&A costs in third-quarter 2021. Total operating costs and expenses in third-quarter 2021 increased 18% year over year to $619.9 million.

Key Picks

Some better-ranked stocks in the Consumer Discretionary sector include Hilton Grand Vacations Inc. HGV, Bluegreen Vacations Holding Corporation BVH and Camping World Holdings, Inc. CWH.

Hilton Grand Vacations sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have jumped 57% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hilton Grand Vacations’ current financial year sales and earnings per share (EPS) suggests growth of 270.4% and 3.85%, respectively, from the year-ago period’s levels.

Bluegreen Vacations flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 120.4% so far this year.

The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates growth of 34.8% and 31.9%, respectively, from the year-ago period’s levels.

Camping World carries a Zacks Rank #2 (Buy). The company benefits from the launch of a fresh peer-to-peer RV rental marketplace and a mobile service marketplace. It has been investing heavily in product development.

Camping World has a trailing four-quarter earnings surprise of 70.9%, on average. Shares of the company have appreciated 75.8% so far this year. The Zacks Consensus Estimate for CWH’s financial-year sales and EPS suggests growth of 16.7% and 52.1%, respectively, from the year-ago period’s levels.

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Boyd Gaming Corporation (BYD) : Free Stock Analysis Report

Camping World (CWH) : Free Stock Analysis Report

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