Here’s Why Investors Should Stock Boyd Sports (BYD) Now
Boyd Sports Association (BYD – Free Report) benefits from focusing on expansion efforts and taking into account the local market of Las Vegas in order to manage its portfolio accompanied by encouraging prospects for online gambling.
This dynamic sports company displays a VGM Score of A, supported by a Value Score of A and a Growth Score of B. This positive trend reflects analysts’ views on performance and strong fundamentals during it’s close.
However, shares of this Zacks Rank #3 (Hold) company lost 17.3% during the year compared to the Zacks Gaming industry’s decline of 6.9%. The company’s growth prospects are largely hampered by high cost conditions, market softness and competitive pressures in its Las Vegas Locals segment.
Additionally, 2024 earnings estimates have dropped over the past seven days to $6.06 from $6.07 per share. The estimated price shows a decrease of 4% from the reported value of the previous year.
Image source: Zacks Investment Research
Let’s take a deeper look and analyze the facts.
Interesting Stock Facts
Extension Steps: Boyd Gaming’s outlook on enhanced expansion initiatives, organic as well as inorganic, is encouraging. The company is engaging in extensive acquisition strategies to strengthen its product portfolio and expand its market reach in new and existing markets. Also, notable partnerships increase its expansion efforts, thereby helping it create value for its customers.
Due to the impressive performance of Sky River Casino (which BYD manages on behalf of the Wilton Rancheria Tribe) when it opened, the Wilton Rancheria Tribe is now finalizing plans for a major expansion of the property. The expanded area will include additional casino space, a hotel tower and meeting and conference facilities. Also, Boyd Gaming has announced that its land-based project at Treasury Chest Casino (expected to be completed by June 2024) is nearing completion. Additionally, during the 2024 first quarter earnings call, the company mentioned improvements and upgrades to the Gold Coast, Ameristar St. Charles and Blue Chip. It expects to start similar projects at Orleans IP and Valley Forge later in 2024.
Focus on Local Markets: Boyd Gaming considers the Las Vegas home market a major driver of its portfolio. With restaurants and bars open, frequent visits from local people may make the company grow. During the first quarter, BYD reported positive customer trends in terms of visitor numbers, frequency and spending as well as growth in the conference business.
In the same quarter, BYD saw increased visitation to Las Vegas due to continued growth in the convention business and resumption of consumer visits to Hawaii due to the lifting of COVID-related restrictions in Hawaii. Due to continued growth trends in tourism, convention business and jobs, the company is optimistic about the health of the Southern Nevada economy.
Online Betting Bode Bode: Online betting is one of Boyd Gaming’s main growth drivers and is focused on finding and implementing opportunities to expand and diversify product lines. One such notable step was to legalize gambling. The sportsbook’s partnership with FanDuel Group and the acquisition of Pala Interactive are accompanied by several opportunities to open sportsbooks in line with its online strategy.
In the first quarter, the Internet segment generated revenue of $146.2 million, up 19% year over year. The growth was supported by FanDuel’s strong performance as well as a $20.0 million increase in gaming tax refunds and other expenses paid on behalf of online partners. In addition, with Pala Interactive’s technology (with a player account management system and iGaming products) and operational and marketing experience, the company is confident and looking forward to the step of advancing its position in the emerging iGaming market.
Factors Confounding Expectations
Costs and High Costs: Despite several online development efforts, Boyd Gaming is still dealing with high earnings, service and property insurance costs. In the first quarter of 2024, selling, general and administrative expenses increased year over year to $108.2 million from $100.3 million. Total operating expenses and expenses were $741.1 million, up from $679.1 million reported last year.
Going forward, the company intends to monitor economic conditions to gauge the effects of rising interest rates and inflationary pressures. Cost pressures, which are likely to ease through 2024, will remain for some time as the company said.
Tough competition: Boyd Gaming continues to face strong competition from various casinos and hotel casinos. In addition to sports facilities, other non-sports resorts and resorts present challenges to the company. As such, its operations face strong competition from new entrants into an already dominant market.
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