Boyd Gaming shares are under scrutiny

A few days before the start of the Super Bowl in Las Vegas, Boyd Gaming Corporation NYSE: WORLD shine a spotlight on Las Vegas in a different way. The Las Vegas-based company released its fourth quarter earnings report. Key results showed earnings per share of $1.66 on revenue of $954.51 million.

Both numbers beat analysts’ estimates, with EPS slightly below the $1.72 the company reported in the same quarter in 2022. For the year, earnings remained stable, but revenue increased 5% in same period.

Boyd hasn’t released full-year guidance for 2024, but analysts clearly liked what they heard. Following the earnings report, Boyd Gaming analyst ratings on MarketBeat show that five analysts reiterated their bullish ratings on BYD stock, with all five raising their price targets from 8% to 25%.

Make up for lost time

One reason for the bullish price projections could be analysts making up for lost time. BYD shares are down more than 4% over the past 12 months. Investors were souring on consumer discretionary stocks in 2023. However, that narrative didn’t play out as expected. Especially when it comes to entertainment titles. As Boyd Gaming’s findings show, consumers are more than willing to spend at casinos. The company reported sequential revenue growth in every quarter and earnings growth in two out of four quarters.

Analysts may be concerned about capital expenditures which amount to $374 million in 2023 and are expected to increase to between $400 million and $450 million in 2024. But this appears to be well covered as the company does not has debts maturing in the near term and increases free cash flow (FCF).

Expected growth from online gaming

In less than a generation, on-premise gaming has become mainstream. Since 2019, the next wave of growth in this sector has taken the form of the online gaming (iGaming) space. Boyd captures this market in two ways.

First, the company has an online casino, Stardust Casino, which allows customers in select states to participate in online casino games. The company also owns a 5% stake in FanDuel, which is owned by Flutter Entertainment plc NYSE: FLOOD. FanDuel, together with DraftKings Inc. NASDAQ: DKNGis one of the leaders in the rapidly growing online sports betting market.

Once upon a time it may have actually made a difference

Another reason why the stock could fall after earnings is the company’s short-term outlook. Boyd cited winter storms and subfreezing temperatures that have swept through parts of the Midwest as the reason for the potentially disappointing results in the Midwest and Southern regions in the current quarter.

Investors may be skeptical when companies cite weather as a reason for not forecasting revenue. Sometimes, however, the request can be made with good reason. And this would appear to be one of those times. The company has seen improving trends since the storms passed.

A drop in purchasable prices may be on the way

The BYD stock chart shows that the stock is down about 2% since the earnings report. This places the stock at a confirmed support level just above its 200-day simple moving average (SMA) and just below its 50-day SMA.

If the stock were to break below that support line, it would be a buyable dip supported by the company’s internal earnings estimates and analysts’ bullish price targets.

Before you consider Boyd Gaming, you’ll want to hear this.

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