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Why Shares of Boyd Gaming Company Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of Boyd Gaming Company (NYSE: BYD  ) were on a hot streak today, gaining as much as 12%, and finishing up 10% after updating its guidance last night.

So what: Ahead of its earnings report coming out shortly, the casino chain actually said it expects results to come in worse than its previous guidance. It now sees adjusted EBITDA from its Borgata property at $15 to $17 million, compared to previous guidance of $22 to $24 million, and it lowered its EPS guidance for the quarter to -$0.21 to -$0.27 from -$0.15 to -$0.20. CEO Keith Smith said, "Despite short-term challenges, we remain optimistic about the overall direction of the business."

Now what: The market's reaction to this news was bizarre. Almost always, shares sell off after lowered guidance, but this holiday season was a strange one. Retailers across the board announced terrible preliminary reports as consumers seemed to stay home and keep their money close. Casinos are a very cyclical business, so the market likely expected that attitude to carry over to Boyd, and thought the effects of the weak holiday season would be worse. Despite the market's reaction, I'd be wary of a company popping on a loss, and would also avoid a casino stock without access to hot properties in Macau or Singapore.

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  • Report this Comment On January 31, 2014, at 7:13 PM, whyaduck1128 wrote:

    I don't know a thing about Macau and other foreign operations, and I haven't been to Atlantic City in years. I do know Las Vegas fairly well, though, and IMO Boyd's operations there, while not nearly as glamorous as those of MGM, LVS, CZR, and WYNN, are run well and presumably profitably. One thing I've noticed there is that they do tremendous business in marketing and supporting Asian and Pacific Islander players.


    Long BYD--and LVS and WYNN

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/31/2015 4:05 PM
BYD $16.10 Down -0.39 -2.37%
Boyd Gaming Corp CAPS Rating: **