Last Update 29 Nov 25
Fair value Decreased 1.04%BYD: Digital Gaming Uncertainties And Core Stability Will Shape Returns Ahead
Analysts have modestly lowered their fair value estimate for Boyd Gaming to $91.80 from $92.77, citing mixed outlooks for digital gaming growth and largely stable underlying fundamentals.
Analyst Commentary
Recent analyst updates on Boyd Gaming reflect a mix of optimism and caution, with new coverage and adjusted price targets highlighting diverging views on the company's future growth trajectory. The focus remains on the outlook for digital gaming and the stability of Boyd's underlying fundamentals.
Bullish Takeaways
- Some bullish analysts have raised their price targets, citing solid recent quarterly fundamentals and viewing shares as attractive at current valuations.
- The strong growth expectation within the digital gaming sector, alongside stable core business performance, supports the view of continued upside potential for Boyd Gaming.
- Resilient execution in core operations and improved profitability are seen as supporting factors for higher future returns for shareholders.
- Post-earnings, there is a perception that Boyd Gaming stock remains a compelling opportunity relative to its industry peers.
Bearish Takeaways
- Some analysts are cautious about the sustainability of forward growth, believing the majority of future gains will be concentrated in digital gaming, which faces competitive and regulatory headwinds.
- Neutral to modest digital outlooks factor in potential challenges related to promotional activity and hold-related volatility.
- Ongoing uncertainty around the regulatory landscape and its impact on digital gaming could pose obstacles to sustained outperformance.
- The current valuation now reflects much of the anticipated growth, which may limit further upside unless execution continues to exceed expectations.
What's in the News
- Cboe Global is entering the prediction markets sector. However, it will initially exclude sports-related products, which impacts competitors in the sports gambling industry including Boyd Gaming (Bloomberg).
- Boyd Gaming recently completed a significant share repurchase by buying back over 1.9 million shares for $160 million. This is part of a larger program that has totaled more than 35 million shares since October 2021.
Valuation Changes
- Fair Value Estimate has decreased slightly to $91.80 from $92.77.
- Discount Rate has edged down to 9.27 percent from 9.28 percent.
- Revenue Growth projections have improved, with the decline moderating to -1.28 percent from 1.98 percent previously.
- Net Profit Margin forecast has dipped marginally to 5.40 percent from 5.51 percent.
- Future Price-to-Earnings (P/E) Ratio expectation has risen slightly to 35.68x from 35.50x.
Key Takeaways
- Expansion efforts, including new projects and upgrades, aim to enhance gaming capacity and customer experience, potentially boosting revenue and margins.
- Growth in online gaming and shareholder returns strategies signify a focus on increasing EBITDAR and enhancing stock valuation.
- Competitive pressures, economic uncertainties, and strategic caution in capital allocation could impact Boyd Gaming's revenue stability, earnings, and shareholder returns.
Catalysts
About Boyd Gaming- Operates as a multi-jurisdictional gaming company in the United States and Canada.
- Boyd Gaming's ongoing expansion activities, including the Sky River project and its phases, are expected to enhance gaming capacity and diversify offerings, potentially leading to future revenue growth.
- The company's investment in upgrading existing properties, like the Suncoast renovation and new amenities at various hotels, is anticipated to enhance customer experience and could drive higher revenues and improved net margins.
- The upcoming projects like the Cadence Crossing in Las Vegas and the Norfolk resort in Virginia aim to tap into underserved markets, which could lead to increased revenues and earnings.
- Boyd Gaming's growth in its Online segment, particularly through Boyd Interactive and its stake in FanDuel, is expected to contribute significantly to EBITDAR growth due to the expanding online gaming market.
- Consistent share repurchases and dividend payments illustrate Boyd Gaming's commitment to enhancing shareholder value, which can positively impact earnings per share and support stock valuation.
Boyd Gaming Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Boyd Gaming's revenue will decrease by 4.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 14.0% today to 16.1% in 3 years time.
- Analysts expect earnings to reach $563.3 million (and earnings per share of $8.39) by about September 2028, down from $564.5 million today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.8x on those 2028 earnings, up from 12.1x today. This future PE is lower than the current PE for the US Hospitality industry at 23.9x.
- Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 10.19%, as per the Simply Wall St company report.
Boyd Gaming Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Competitive pressures impacted revenue and EBITDAR at The Orleans, which could continue affecting overall earnings if not mitigated.
- Economic uncertainties have been noted, with management expressing caution in capital allocation, which could affect future net margins and shareholder returns.
- Weather-related disruptions and leap year comparison issues caused significant challenges, particularly in the Midwest & South segment, potentially impacting future revenue stability.
- The transition of existing properties like Par-A-Dice and associated costs may not achieve the same returns as previous projects, which could affect projected financial gains and net margins.
- The management's strategic focus on maintaining a strong balance sheet amidst economic uncertainty might limit aggressive capital return strategies, impacting future earnings and shareholder value.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $90.769 for Boyd Gaming based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $101.0, and the most bearish reporting a price target of just $80.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.5 billion, earnings will come to $563.3 million, and it would be trading on a PE ratio of 13.8x, assuming you use a discount rate of 10.2%.
- Given the current share price of $85.34, the analyst price target of $90.77 is 6.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.