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Why Boyd Gaming Corporation's Shares Fell 10.4% in February

By Travis Hoium - Mar 8, 2018 at 4:48PM

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A disappointing earnings report doesn't tell the whole story of Boyd Gaming.

What happened 

Shares of gaming company Boyd Gaming Corporation ( BYD 3.32% ) fell 10.4% in February, according to data provided by S&P Global Market Intelligence, after reporting fourth-quarter results that fell short of expectations. With gaming stocks trading near 52-week highs, even a small miss can sometimes send a stock crashing.

So what 

Fourth-quarter revenue was up 6.5% to $590.8 million and adjusted EBITDA rose 6.9% to $148.4 million, both solid improvements in results. But adjusted earnings per share of $0.22 fell $0.04 short of expectations and even revenue was below the $596.2 million analysts were expecting.

Casino chips falling on a gaming table.

Image source: Getty Images.

Boyd continues to execute on a slow and steady growth strategy that includes expanding its footprint with the announced acquisition of five new properties. Last quarter, it looks like expectations had just gotten ahead of actual results in the market.

Now what 

I don't think there's anything to worry about with Boyd Gaming long term. The company is growing its revenues and earnings as you would hope in a growing economy. And as competitors merge, the industry will consolidate further, which should help push margins higher. Long term, I think this is still a well-positioned company in gaming, even after last month's drop.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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