Las Vegas-based Boyd Gaming Corporation (BYD) operates as a multi-jurisdictional gaming company with 28 gaming entertainment properties. BYD’s EPS and revenue came above analyst estimates in the third quarter. Its EPS was 11.8% above the consensus estimate, while its revenue beat analyst estimates by 2.4%.

BYD’s President and CEO, Keith Smith, said, “This quarter was another solid performance by our company, as we achieved third-quarter EBITDAR that was second only to last year’s record quarterly performance. These results were driven by our continued focus on core customers and sustained efficiencies throughout our business as our operating model is successfully meeting today’s challenges and delivering consistent results.”

“Our strong operating performance is producing robust free cash flow, allowing us to return nearly $500 million in capital to our shareholders so far this year. Overall, we are encouraged by the resiliency of our business and remain confident in our strategy and our ability to deliver consistent results in the current economic environment,” he added.

On August 15, 2022, the company opened Sky River Casino near Sacramento. It also has a seven-year management agreement to operate Sky River on behalf of the Wilton Rancheria tribe.

On November 1, 2022, BYD announced that it had completed the acquisition of Pala Interactive LLC and its subsidiaries. President and CEO of BYD said, “Online casino gaming is an attractive growth opportunity for our company, and the acquisition of Pala Interactive provides us with the technology, products, and expertise to create a profitable regional online casino business.”

The acquisition of Pala will help the company execute its iGaming strategy. BYD will now be able to integrate the online casinos with its existing land-based operations and leverage and monetize its customer database, helping it drive growth for its iGaming and land-based operations. Also, the acquisition will help BYD expand its customer base.

On January 1, 2023, BYD and FanDuel Group announced the availability of the online FanDuel Sportsbook in Ohio and the opening of a new retail sportsbook at Belterra Park Cincinnati.

BYD’s revenue grew at a CAGR of 8.3% over the past five years. Its EBIT grew at a CAGR of 27.7% over the past three years. In addition, its EPS grew at a CAGR of 56% over the past three years.

The company is expected to pay a quarterly dividend of $0.15 on January 15, 2023. Its trailing-12-month dividend of $0.60 yields 1.08% on the current share price. It has a four-year average yield of 0.53%. Its dividend payouts have increased at a 30.5% CAGR over the past three years and a 32% CAGR over the past five years.

BYD’s stock has gained 6.7% in price over the past six months, and it has declined 11.3% over the past year to close the last trading session at $55.33.

Here’s what could influence BYD’s performance in the upcoming months:

Robust Financials

BYD’s total revenues increased 4.1% year-over-year to $877.26 million for the third quarter ended September 30, 2022. The company’s operating income increased 6.4% year-over-year to $237.46 million. Its adjusted earnings rose 6.8% year-over-year to $159.17 million. 

Also, its adjusted EPS came in at $1.48, representing an increase of 13.8% year-over-year.

Mixed Analyst Estimates

BYD’s EPS and revenue for fiscal 2022 are expected to increase 12.1% and 4.5% year-over-year to $5.74 and $3.52 billion, respectively. Its EPS and revenue for fiscal 2023 are expected to decline 5.5% and 2% year-over-year to $5.42 and $3.45 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters.

Discounted Valuation

BYD’s forward non-GAAP P/E of 9.64x is 26.2% lower than the 13.06x industry average. Its forward EV/EBITDA of 7.32x is 21% lower than the 9.27x industry average. Also, the stock's 9.47x forward EV/EBIT is 25.9% lower than the 12.77x industry average.

High Profitability

BYD’s 16.41% trailing-12-month net income margin is 216.9% higher than the 5.18% industry average. Likewise, its 26.81% trailing-12-month EBIT margin is 236.9% higher than the 7.96% industry average. 

Furthermore, the stock’s 15.46% trailing-12-month levered FCF margin is significantly higher than the 1.35% industry average.

POWR Ratings Show Promise

BYD has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BYD has a B grade for Value, in sync with its discounted valuation.

It has an A grade for Quality, consistent with its high profitability.

BYD is ranked #2 out of 28 stocks in the Entertainment – Casinos/Gambling industry. Click here to access BYD’s Growth, Momentum, Stability, and Sentiment ratings.

Bottom Line

In the last quarter, BYD’s EPS and revenue came above analyst estimates despite the uncertain macroeconomic environment. Moreover, the company has expressed confidence in maintaining its consistent operational performance. Its acquisition of Pala Interactive is expected to drive higher revenues and expand its customer base.

Given its robust financials, discounted valuation, and high profitability, it could be wise to buy the stock now.

How Does Boyd Gaming Corporation (BYD) Stack up Against Its Peers?

BYD has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Entertainment – Casinos/Gambling industry with an A (Strong Buy) rating: International Game Technology PLC (IGT), Inspired Entertainment, Inc. (INSE), and Accel Entertainment, Inc. (ACEL).

BYD shares were unchanged in premarket trading Friday. Year-to-date, BYD has gained 1.47%, versus a -0.90% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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