Boyd Gaming Corp (BYD)

Incorporated in 1988, Las Vegas-based Boyd Gaming owns and operates 19 casinos in six U.S. states making it one of the most diversified players in the industry.

Along with wholly owned entities, the company has also entered into a 50% joint venture with MGM Mirage for the Borgata Hotel Casino. This jointly owned hotel has become the leading player in Atlantic City, churning around $70 million in monthly revenues. The other major revenue drivers of the company are markets of Las Vegas and Atlantic City, providing 70% of its overall profit.

Boyd’s core function is gaming operation, which spawns around 75% to its overall tally. However, it also operates a travel agency and an insurance company, which provide only a meager contribution to the company’s revenue.

The outlook of the world’s most established gaming market, Las Vegas, appears very exciting. The market is expected to grow further backed by the booming Vegas population, increasing by over 5000 people a month, along with stable regulations and high entry barriers, helping the existing players reap the benefits.

The company’s outlook appears alluring, with Borgata expansion project and a new hotel tower, which is expected to open by 2007. Additionally, the recently opened South Coast casino and expansion of blue chip property in Indiana will also start reaping benefits soon. All these factors will mount the company’s revenue in the short term.

Boyd also has a massive pipeline with development of Echelon Place on the 63-acre site in Las Vegas, as a replacement of its own Stardust casino. This new project, expected to open in 2010, will be worth a humungous $4 billion, making it one of the most expensive hospitality industry developments ever. Further, considering the company’s growing top line, record profits from its downtown Las Vegas casinos and the ownership of significant valuable property makes this stock worth buying for the long term.

Rising from obscurity (and still not exactly a household name), Boyd has quickly become the world's No. 3 gaming empire.

The only company around to have a stake in all three LV markets -- downtown, strip, and locals -- not to mention Atlantic City's top revenue-grossing property (Borgata), and exposure to Midwest and Gulf Coast riverboat markets.

The massive $4b Echelon Place development soon to be under construction should de-leverage Boyd's balance sheet and become a key cash flow growth driver once the complex is up and running. Furthermore, it will give BYD a prime opportunity to ramp-up its cross-marketing capabilities and extract more non-gaming revenues from visitors.

Elsewhere, there are additional projects that could soon find their way into the development pipeline, including possibly Barbary Coast.

Boyd has shown an ability to squeeze more revenues out of its properties, and there are ample opportunities for additional margin expansion.

The stock has shed one-fourth of its value over the past year over myopic concerns regarding a slowdown in the LV housing market and moderating growth rates in the key locals segment.

However, the long-term demographics are still very encouraging, and in no way does the recent sale of the South Coast suggest that the tide has turned on the locals market. LV still has an immense population base of affluent residents (most with a taste for gaming and entertainment) and 7,000 more people moving into the metro area every month. The recent uptick in capacity will be quickly absorbed.

Furthermore, regulatory barriers to entry have limited future casino development to pre-zoned areas, giving entrenched leaders like Boyd (and STN) an opportunity to cash in on a growing supply/demand imbalance.

After pulling back sharply, BYD is now among the most attractively valued stocks in the gaming group, with a P/CF ratio below 7, EV/EBITDA of 8, and PEG below 1.

To understand how far Boyd has come recently, note that the firm's dividend has climbed 80% since initiated two years ago.

BYD may not have reached an exact bottom, but I'm betting this recent losing streak is winding down.

As of close of business on 2/20/08, this was a 5-star Morningstar stock trading at less than half of its Morningstar fair value.

Low P/E. Good Div. Temporary bad news affecting share price. Insider buying.

People are getting dumber. Dumb people tend to waste their money on losing bets.

long term horizon will show byd has been sorely misjudged by the so called "experts"

This underperforms until private equity money tries to buy them out for their land holdings on the Las Vegas Strip.

Gaming is going crazy in Asia.

MAJOR value play; their land holdings on the strip (87 acres) is roughly equal to the entire market cap of the company! as echelon moves toward its PJ2010 opening, a buyout is more and more likely.

chk999longonly's portfolio revealed this one to me. Another bad quarter, but horrible future performance has already been factored into the price. I understand the casino gig, and feel the market has unnecessarily penalized BYD during a tough economic period. So long as they control their growth in the short-term, this a company that can't lose for an extended period of time.

CAPS Rating: 3 Stars [218 outperforms / 24 underperforms]

Making a comeback after bing beaten down

The Borgata in Atlantic City rocks! The most packed Casino/Hotel ever, and the only fashionable one. BYD may be on to something.

Stock is in a different place than Harrah's and will not benefit from same exuberance over Harrah's.

Gaming is back, just give it some time.

I just cant see the recovery here for years. Too many rooms and not enough people coming through the airport

Just assuming this is somewhere near the bottom even though the sector probably has bit left to fall.

Casino.

52 week low

Oversold. Sell off over done.