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Thesis
While Boyd Gaming Corporation’s (NYSE:BYD) recent equity sale of its 5% equity stake in FanDuel frees up almost $1.76 billion in cash needed to pay down debt, I believe it will significantly reduce
Boyd Gaming's FanDuel Equity Sale - Like Cutting The Flowers And Watering The Weeds
Summary
- Boyd Gaming Corporation's sale of its FanDuel stake improves its balance sheet but sacrifices significant future online gaming growth potential.
- The company faces stagnating revenue and declining profit margins, with macroeconomic headwinds and weakening consumer demand impacting brick-and-mortar casinos.
- Despite strong management and past returns, Boyd now lags peers in margin trends and risks becoming a value trap as fundamentals deteriorate.
- Given slower growth prospects and reduced upside, I rate BYD stock a Hold; a further price increase to $90 or $100 would warrant a downgrade to Sell.
I have been investing in the stock market since I was 17 years old, and over the 25+ years since I have learned the joy of compounding, the value of dividend reinvesting, and the principle that patient investing through good times and bad brings the greatest rewards. I believe the key to creating wealth is the slow accumulation of high quality assets, and the key to enjoying the process of investing is to mix this steady approach with some high risk/high reward opportunities, underappreciated turnaround plays, and transformative technologies. I invest with integrity, only putting my money into companies and industries that aim to make the world a better place.I would consider myself an amateur investor, entirely self-taught with no formal education in investing or business, but smart at figuring out who is worth listening to. I read widely and embrace the notion that my own growth comes from learning from others. In my other life, I have been teaching at the college/university level for over 20 years. I have a PhD from Brunel University and am an accomplished academic writer and editor.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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