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Boyd Margin Story is impressive, analyst talks about mergers and acquisitions, possible resumption of dividends

Posted on April 28, 2021, 9:51 AM

Last updated: April 28, 2021, 11:17 am.

Todd Shriber

Boyd Gaming (NYSE: BYD) reported better-than-expected Q1 results on Tuesday. But the real story is the continued growth in margins and signs that March's pace of movement is shifting to April.

Boyd stock
A man walks outside Boyd Fremont Casino in an empty downtown Las Vegas during a pandemic. Analysts are enthusiastic about the action. (Picture: Fox5 Las Vegas )

This could mean operator Orleans will deliver another burst of impressive data for the current quarter, with some analysts predicting a greater rise in Boyd's stock. Macquarie's Chad Beynon rates the regional gambling operator as "neutral," but raised the name's target price to $ 77 from $ 62. That implies a plus of 19. 5 percent as of April 27 closes and is well above the consensus forecast of around $ 60.

Boyd's 100 There are still margin constraints in the regional percentage model due to structural changes caused by COVID - 19, " Beynon said in a letter to customers.

“First-quarter margins increased by 1,200 basis points in Q1 19. April's results carried over from March and hotel bookings are at their highest level last year. "

Located in Las Vegas, Boyd operates 28 gaming venues in 10 states, including 11 in his home market. In Sin City, Boyd is the largest downtown operator and generates a significant portion of its revenues from the resurgent Las Vegas Resident (LVL) segment.

Boyd Stock Strengths

Growing signs Las Vegas residents are getting coronavirus vaccinations and eagerly returning to their favorite casinos, coupled with Boyd's enviable perch at the service of this demographic is the catalyst for the action. But there is more to this story.

In the first quarter, LVLs and downtown Boyd's venues merged for 35 percent earnings before interest, taxes, depreciation, amortization and restructuring costs or rent ( EBITDAR). T. The remainder comes from the operator's casinos in the Midwest and South. LVL margins were the best of the three segments, but revenues in the Midwest and South locations exceeded the comparable level in 2019.

Margin expansion and revenue growth in LVL demographics and regions beyond Nevada could support Boyd's stock as downtown Las Vegas remains slow. Macquarie's Beynon notes that the operator's market share in that part of the city is now 10 percent compared to the pre-pandemic clip of 25 percent.

Boyd's profit in the city center before interest, taxes, depreciation (EBITDA) is expected to drop 49 percent this year compared to 2019, ahead of a six percent increase in 2022 .

Looming Online Catalysts

While Boyd This is not the name many investors think of when it comes to online sports betting, the company does have a leverage in it with a five percent stake in FanDuel - a trait some analysts believe is not accurately reflected in Boyd's stock .

From an online perspective, Boyd's FanDuel partnership and the launch of proprietary iGaming (this quarter) should deliver positive EBITDA of $ 20 million in 2021, " Beyon said.

The analyst values the core business of land based casino operators at $ 59 share, and online casinos and sports betting at $ 17.

He adds that as leverage declines, Boyd could resume his dividend, which was suspended last year due to the pandemic, or look for "accumulating" mergers and acquisitions later this year.

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