#4 - Boyd Gaming Corporation (NYSE:BYD)
Year-to-Date Loss: 60%
As it turns out, what happens in Vegas, may not stay in Vegas. That’s the reason casinos have shut their doors to comply with mandates for social distancing. And like the other companies in this presentation, Boyd Gaming (NYSE:BYD) appears to be less positioned to be profitable on the other side of this.
One of the first things investors are looking at is the health of the company prior to the government’s aggressive response to the coronavirus. And if you don’t look too closely, you’d see that Boyd beat on both earnings and revenue. And as we entered 2019, the casino industry continued to grow at a modest pace.
I’m looking at two things. At the end of 2019, Boyd’s earnings report listed the company’s cash on hand as being $250 million. The company had total long-term debt of $3.81 billion.
However, the company’s revenue for all of 2019 was $3.33 billion. There’s no telling how low this number will drop in 2020 and the company has wisely pulled its guidance until it can get clarity. And in fairness, only a fraction of the company’s long-term debt will be due in 2020. However, with revenue being down and only $250 million of cash on hand profit will be hard to come by.
Plus, it appears more likely that the company will be receiving stimulus funds from the government. The terms of this stimulus will be very important. If it comes to the companies as a loan, the way Treasury Secretary Mnuchin envisions, than the companies will have to pay it back. If, however, it becomes more of a bailout, that could change the calculus for Boyd and other casino companies.
I have little doubt that the casino industry will return to business as usual once the virus fears ease. Although the industry carries many of the same health risks as, say, a cruise ship, you don’t hear the outcry of casinos being “petri dishes” for germs. The casino industry features the double whammy of crowded spaces combined with high touch surfaces. This makes them prime spaces for the spread of a virus. Unfortunately, Boyd Gaming has an additional hurdle to clear than just customer confidence.
About Boyd Gaming
Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company operates through Las Vegas Locals, Downtown Las Vegas, Midwest & South, and Online segments.
Read More - Current Price
- $72.33
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $91.38 (26.3% Upside)
