The source of the enthusiasm is Borgata, the company's 50-50 joint venture with MGM Mirage
With the boost from Borgata, Boyd's fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 14.5% to $75.1 million, with the 50% share of Borgata accounting for almost a quarter of the results. That made up for the impact of higher gaming taxes on properties in Illinois, Indiana, and Las Vegas.
With one bold move, Boyd has redefined itself. Known as a locals casino operator with its Sam's Town brand, collection of downtown Las Vegas properties, and riverboats, it has demonstrated that it can develop and operate resort-style casinos. This point is so important that it devoted half of its press release to Borgata.
Boyd had been a pure value player, expanding into new markets by snapping up sub-premium properties at extremely attractive prices. Just last month, it announced the purchase of Harrah's
But along with Borgata's success, Boyd has confidence in the future of its famed -- and aged -- Stardust property on the Las Vegas Strip. Next year, Wynn Resorts
The gist of it is this: Aside from Borgata, Boyd is not a premium player in any other market -- yet. That, along with its brand image, should change as the company develops more resort-style properties over the coming years. When that happens, the stock could shift from a strict value play to a more premium play along the lines of Mandalay Resort Group
If there's a concern at this point, it's that this shift is already becoming reflected in the stock price. With the company trading at about seven times 2004 EBITDA, it's clear that investors are already catching on.