Increased contention inwards the Las Vegas locals market, videlicet in the word form of the Victoria de Durango Casino & Resort, was among the reasons Boyd Gaming (NYSE: BYD) missed first-quarter earnings estimates, trigging a massive selloff inwards the carry today.
The regional cassino manipulator said it earned $1.51 a divvy up in the first of all terzetto months of the year on the basis of non-generally recognised accounting system principles (non-GAAP). Analysts expected earnings per apportion of $1.59. As a result, shares of Boyd tumbled with the stock settling lour by 15.44% on intensity that was to a greater extent than viii times the day-after-day average.
Boyd cited high-risk weather as a retarding force on its gaming venues inward the midwestern United States and the South and “increased militant pressures inward the Las Vegas Locals market” as reasons for the “challenging take up to the year.” Red River John Rock Resorts’ (NASDAQ: RRR) Durango Casino & Resort inwards Southwest Las Vegas, which opened lowest December, is the primary germ of unexampled competition to Boyd’s Las Vegas properties, but promotional activity past other competitors is affecting Boyd.
The salutary word is that our major competitor, yet with the opening of a new property really has non elevated the level off of promotions,” said Boyd CEO Keith Kathryn Elizabeth Smith inward response to a query from Stifel psychoanalyst Steven Wieczynski on the company’s group discussion call. “It is some of the other smaller operators, main(a) operators sort of around town, in that respect are some properties around the Orleans and the Gold Coast that have gotten more promotional tardily inward 2023 and into 2024 that I imagine are impacting the market.”
Smith didn’t identify specific littler operators that upping promotional activity. Wieczynski reiterated a “hold” rating on Boyd stock patch paring his cost target area to $65 from $71.
Insider Selling May Have Tipped Weakness in Boyd Stock
In February and March, Boyd insiders, including Ian Douglas Smith and the Boyd family, dumped $53.4 million worth of the stock. With the welfare of hindsight, that may have been a recite the operator was expecting tepid first-quarter results.
On the group discussion call, Adam Smith acknowledged to JPMorgan analyst Joseph Greff that the militant headwinds created past Durango were more pronounced in March than inward Jan and February. To starting the electric current quarter, Boyd isn’t seeing a change of mind of that weakness in the Las Vegas locals segment, but it’s not experiencing an quickening of it, either, Kathryn Elizabeth Smith told the analyst.
“But at that place are other competitors inward the market other than ourselves and our largest competitor hither that are reacting differently to that unexampled competition than we are,” said CFO Josh Hirsberg. “And what we’re trying to say is those are the folks that are having an wallop on our business, and Durango is maybe a lesser of an impact, simply so you can variety of translate the dynamics of the marketplace.”
Though not mentioned explicitly by Boyd, Durango’s fast starting could be the impetus for plans proclaimed shoemaker's last month for a unsubtle renovation of Suncoast Hotel & Casino in suburban Las Vegas — single of the Boyd venues that’s closet to Durango.
Red John Rock Punished, Too
While Boyd admitted Durango is adding some competitive pressure inward the Las Vegas locals market, that commentary wasn’t beneficial to shares of Red River Rock. In fact, that inventory tumbled 8.67% today on volume that was more than image the day-after-day average out perhaps owing to Boyd’s comments on promotional disbursement past littler independent players in Las Vegas.
Specific to Boyd, Stifel’s Wieczynski believes the operator’s tough balance mainsheet and telling discharge cash rate of flow (FCG)-generating capabilities could make up it I of the safer plays among regional casino stocks.
“With BYD shares showing an ~9% FCF yield, we believe it’s a affair of clip before investors match on and realize shares remain undervalued when compared to peers,” concluded the analyst.
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