A Little Bad Luck at Boyd Gaming

Gaming conditions seem to be getting better across the country, but it's tough to post a big quarter when your customers are extra lucky at your tables.

On Monday, Boyd Gaming (NYSE: BYD  ) reported revenue of $595.4 million, down 4.1% on the quarter (revenues at the Borgata hotel and casino in Atlantic City were down 7.2%). Total adjusted EBITDA was $115.4 million, down 18.2% from last year, and net income was $5.6 million, or $0.06 per share. But there was approximately $9 million of "bad luck" at Borgata table games, so both revenue and EBITDA could have been significantly better.

This looks very disappointing on the surface, but Wall Street was expecting worse, which gave the stock a boost yesterday. Management was upbeat, pointing to increasing stability in the market in October and the probability of positive comparisons beginning in the fourth quarter.

Just say no to Borgata
Boyd also announced it would not purchase the other half of the Borgata from MGM Resorts (NYSE: MGM  ) . Earlier this month, MGM agreed to sell its half of Borgata to Leonard Green & Partners to exit the Atlantic City market. Boyd had a chance to buy the stake, but said the price would not give sufficient return to shareholders and the company is focused on deleveraging its balance sheet.

Boyd did make progress on deleveraging, as a payment from Borgata allowed the company to reduce debt by $170 million, to $2.35 billion.

Hit or stay?
The quarter was an incremental positive for Boyd, but I would like to see some revenue and EBITDA increases before getting too excited about this stock. We will see next week if strength outside of Atlantic City and Las Vegas improved the fortunes of regional operator Ameristar Casinos (Nasdaq: ASCA  ) .

Interested in reading more about Boyd Gaming? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

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Fool contributor Travis Hoium always hits on an 11 and does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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