Is It Time To Reassess Boyd Gaming (BYD) After Its Strong Multi Year Share Price Run

• If you are wondering whether Boyd Gaming’s share price still offers value after its long run on the market, this article will walk you through what the current numbers might be telling you.
• The stock recently closed at US$85.09, with returns of 13.8% over 1 year, 43.3% over 3 years, and 92.8% over 5 years. The shorter term picture shows a 5% decline over 7 days and a 1.3% decline year to date.
• Recent attention on Boyd Gaming has been shaped by ongoing discussion around the US gaming and hospitality sector, regulatory developments in regional markets, and the company’s positioning within those trends. These themes have helped frame how investors think about both the potential and the risks around the current share price.
• On our checklist of six valuation tests, Boyd Gaming has a value score of 4 out of 6. This sets up a closer look at how different methods assess the stock today, and hints at an even more useful way to think about value that we will come back to at the end.

Boyd Gaming delivered 13.8% returns over the last year. See how this stacks up to the rest of the Hospitality industry.

Approach 1: Boyd Gaming Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today’s dollars. It is essentially asking what Boyd Gaming’s future cash generation is worth right now.

For Boyd Gaming, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $504.5 million. Analysts provide explicit forecasts out to 2027, with free cash flow for that year modeled at $584.18 million. Beyond that, Simply Wall St extrapolates cash flows through to 2035 using gradually changing growth assumptions, rather than fixed analyst estimates.

Rolling all of those projected cash flows into the DCF framework produces an estimated intrinsic value of about $125.24 per share. Compared to the recent share price of $85.09, this implies the stock trades at roughly a 32.1% discount to that DCF estimate, which suggests the market is pricing Boyd Gaming below this cash flow based valuation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Boyd Gaming is undervalued by 32.1%. Track this in your watchlist or portfolio, or discover 880 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Boyd Gaming.

Approach 2: Boyd Gaming Price vs Earnings (P/E)

For a profitable company like Boyd Gaming, the P/E ratio is a straightforward way to link what you pay for the stock to the earnings it currently generates. Investors usually expect higher P/E ratios when they see stronger growth potential and lower perceived risk, while slower growth or higher risk tends to justify a lower, more conservative P/E.

Boyd Gaming currently trades on a P/E of 3.55x. That sits well below the Hospitality industry average P/E of 21.38x and also below the peer group average of 56.72x. Simply Wall St’s Fair Ratio for Boyd Gaming is 3.53x, which is their estimate of an appropriate P/E once you factor in elements such as earnings growth, profit margins, industry, market cap and company specific risks.

The Fair Ratio is more tailored than a simple comparison with industry or peers because it adjusts for Boyd Gaming’s own characteristics rather than assuming all companies deserve the same multiple. With the Fair Ratio at 3.53x and the actual P/E at 3.55x, the stock’s price based on earnings looks very close to what this model suggests is reasonable.

Result: ABOUT RIGHT

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1429 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Boyd Gaming Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about Boyd Gaming linked directly to your own estimates for future revenue, earnings, margins and a fair value per share.

On Simply Wall St, Narratives live in the Community page and give you an easy way to connect three pieces: what you believe about the business, the financial forecast that flows from that view, and the fair value that drops out of those numbers.

Once you have a Narrative, you can compare your fair value to the current share price to help decide whether the stock looks attractive, fully priced or expensive according to your own assumptions. The platform then updates that Narrative automatically when new information, such as earnings or news, is added.

For Boyd Gaming, one investor might build a Narrative that assumes strong revenue growth and a higher fair value, while another could plug in more conservative revenue expectations and margins and arrive at a much lower fair value. This gives you a clear sense of how different views translate into different prices.

Do you think there’s more to the story for Boyd Gaming? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com