Boyd Gaming (BYD)

Gaming and hospitality company Boyd Gaming (NYSE:BYD) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 4.5% year on year to $1.00 billion. Its non-GAAP profit of $1.72 per share was 5.8% above analysts’ consensus estimates.

Company Overview

Run by the Boyd family, Boyd Gaming (NYSE:BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

Competitors in the gaming sector include Caesars Entertainment (NASDAQ:CZR), MGM Resorts (NYSE:MGM), and PENN Entertainment (NASDAQ:PENN).

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Boyd Gaming grew its sales at a 11.4% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Boyd Gaming’s recent performance shows its demand has slowed as its annualized revenue growth of 4.8% over the last two years was below its five-year trend. Note that COVID hurt Boyd Gaming’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Gaming and Non-Gaming, which are 65.5% and 16.5% of revenue. Over the last two years, Boyd Gaming’s Gaming revenue (casino games) was flat while its Non-Gaming revenue (hotel, food, beverage) averaged 8.5% year-on-year growth.

This quarter, Boyd Gaming reported modest year-on-year revenue growth of 4.5% but beat Wall Street’s estimates by 15.7%.

Looking ahead, sell-side analysts expect revenue to decline by 12.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.

Boyd Gaming’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 21% over the last two years. This profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q3, Boyd Gaming generated an operating margin profit margin of 13.9%, down 9 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Boyd Gaming’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q3, Boyd Gaming reported adjusted EPS of $1.72, up from $1.52 in the same quarter last year. This print beat analysts’ estimates by 5.8%. Over the next 12 months, Wall Street expects Boyd Gaming’s full-year EPS of $7.17 to grow 9.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Boyd Gaming has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 12.2% over the last two years, slightly better than the broader consumer discretionary sector.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Boyd Gaming’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 17%, slightly better than typical consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Uneventfully, Boyd Gaming’s ROIC has stayed the same over the last few years. Given the company’s underwhelming financial performance in other areas, we’d like to see its returns improve before recommending the stock.

Boyd Gaming reported $319.1 million of cash and $1.9 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.28 billion of EBITDA over the last 12 months, we view Boyd Gaming’s 1.2× net-debt-to-EBITDA ratio as safe. We also see its $110.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Boyd Gaming blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flattish immediately following the results.

Updated: December 4, 2025 at 9:55 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Boyd Gaming.

Boyd Gaming doesn’t pass our quality test. For starters, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its projected EPS for the next year is lacking. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Boyd Gaming’s P/E ratio based on the next 12 months is 11x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $91.80 on the company (compared to the current share price of $81.50).