Boyd Gaming Corporation Reveals Decline in Fourth Quarter Income
Despite Wednesday's stock rollercoaster, Boyd Gaming's fourth-quarter report, along with other company economic indicators and sharp managerial plans for the future posityioning of the firm, show a company that is underpriced and can expect a better situation than many larger casino stocks.
Boyd announced Wednesday that adjusted net income declined from 45 cents per share to 39 cents; however, this beat analyst predictions of 37 cents in an industry poll. While the stock, which opened at $24.50, closed for the day down 1% at $24.28, it had fluctuated as high as $26.25. Thursday, the stock followed the general market trend, continuing to decline as most stocks dropped in the face of rising oil prices and weak showings of the U.S. dollar. Over the last year, Boyd has traded in a range from $23.00 to $54.22.
As casino stocks in general become a more risky investment, Boyd Gaming has several factors that indicate its stock may be among the most likely of gaming stocks to continue generating a good return. Boyd's partnership with MGM Mirage in the Borgata Hotel Casino in Atlantic City has worked well, as the casino continues to increase earnings while most Atlantic City properties have shown decline in the face of stiff out-of-state competition.
Boyd properties in Illinois, Louisiana, and Mississippi have all returned better earnings reports than industry analysts expected. Boyd's Nevada holdings, including the Gold Coast Casino, Orleans Casino, Fremont Casino, and Sam's Town Gambling Hall, used efficient cost-control measures to achieve increased earnings even as gross revenue slipped.
Boyd's overall philosophy of finding the gaming markets not satisfied by the casino giants and then catering to them seems likely to foster future growth. While Wynn Resorts, Las Vegas Sands, and MGM Mirage spend billions chasing the high-roller market around the globe, Boyd positions itself to attract Vegas locals and other audiences left cold by the elitism of the Strip. NASCAR fans in town for the weekend race at the Las Vegas Speedway naturally gravitate to Sam's Town, which sponsors a Busch Series race in March.
The Main Street Station Casino and Fremont Casino help downtown Las Vegas retain the old Vegas flavor, welcoming one and all. Both the Gold Coast and Orleans remain local favorites.
While other companies pursue risky ventures in direct competition with each other, Boyd gives its investors the promise of a mostly-neglected niche market which could carry the stock through rough economic waters.
