Update: Boyd Gaming Earnings

Aug.15.14 | About: Boyd Gaming (BYD)

Summary

The company missed consensus estimates on the top and bottom lines.

We still believe the company is a long-term buy, but note the vast weakness we’ve seen in the casino industry.

We didn’t forecast the recent quarterly miss, with Vegas and Atlantic City both vastly underperforming.

Boyd Gaming (NYSE:BYD) posted 2Q earnings that had EPS coming in at $0.05 (under $0.08 consensus) and revenues were $772.5 million (below $782.5 consensus). Shares are down 8% since earnings were announced. Management noted that the miss was due to weakness in casual play.

We're still down close to 12% since our initial coverage on Boyd back in August of last year. Shares have been volatile along the way as well, with shares down 30% from the 52-week high. At the time, we noted that Boyd is a long-term investment and put a multi-year price target of $54 on the stock. Vegas has yet to come back as strongly as expected and Atlantic City has turned very sour. In August, we noted,

Thanks to the 2012 Peninsula Gaming acquisition, Boyd now operates in eight major jurisdictions, compared to the previous six. As well, its revenues are now more diversified, with only around 24% tied to Vegas (compared to 33% prior to the acquisition), and 21% for Atlantic City (compared to the former 30%).

There's still some long-term value here for investors, but it relies on the company's ability to make Peninsula Gaming work, which would include paying down its sizable debt load. The gaming industry has been a tough one to own over the last year, with our Scientific Games (update here) position working against us, and the same with Pinnacle Entertainment (update here).

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.