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If you are wondering whether Boyd Gaming’s current share price lines up with its underlying value, this article will walk you through what the numbers actually say.
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The stock last closed at US$84.54, with returns of 0.8% over the past week, a 1.9% decline over the past month, and gains of 11.3% over 1 year, 31.1% over 3 years, and 66.1% over 5 years.
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Recent news around Boyd Gaming has largely centered on ongoing interest in U.S. gaming and hospitality operators and how investors are weighing long term demand for entertainment and leisure. These themes help frame how the market is currently thinking about Boyd Gaming’s prospects and risk profile.
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On our valuation checklist, Boyd Gaming currently scores 5 out of 6. Next we will look at how different valuation methods arrive at that outcome and why a broader framework at the end of the article can help you put those numbers in better context.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back to a present value. It is essentially asking what Boyd Gaming’s future cash generation is worth in today’s dollars.
For Boyd Gaming, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about $504.5 million. Analysts provide forecasts out to 2027, when Free Cash Flow is projected at $592.9 million, and Simply Wall St then extrapolates further, with 2035 Free Cash Flow estimated at $827.4 million. All of these figures are in $ and remain below $1b, so they are still firmly in the hundreds of millions range.
Discounting these projected cash flows gives an estimated intrinsic value of about $126.06 per share. Compared with the recent share price of $84.54, the DCF output implies a 32.9% discount, which suggests the shares are trading below this estimate of underlying value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Boyd Gaming is undervalued by 32.9%. Track this in your watchlist or portfolio, or discover 875 more undervalued stocks based on cash flows.
For a profitable business like Boyd Gaming, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. The level of P/E that feels «normal» for a stock tends to reflect how the market views its growth prospects and risk, with higher expected growth and lower perceived risk usually supporting a higher multiple.
Boyd Gaming currently trades on a P/E of 3.53x. That sits well below the Hospitality industry average of about 21.15x, and also below the peer group average of 55.34x, so on simple comparisons the shares look inexpensive relative to both the sector and similar companies.
Simply Wall St also calculates a Fair Ratio for Boyd Gaming of 3.86x. This is the P/E level their model suggests based on factors such as earnings growth, industry, profit margin, market cap and company specific risks. This Fair Ratio can be more informative than a plain industry or peer comparison because it adjusts for Boyd Gaming’s own characteristics rather than assuming it should match the average company. With the current P/E of 3.53x sitting below the Fair Ratio of 3.86x, the shares screen as undervalued on this metric.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1426 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives. Narratives let you attach a clear story about Boyd Gaming’s future to the numbers you are seeing on the screen.
A Narrative is simply your view of the company written into its assumptions, including what you think is a reasonable fair value, and how revenue, earnings and margins could develop from here.
On Simply Wall St, Narratives live in the Community page. Millions of investors use them to connect a company’s story to a forecast, then to a fair value that can be compared with the current share price to help decide whether the gap between value and price looks attractive or stretched.
Because Narratives are updated when fresh information arrives, such as new earnings or news, your Boyd Gaming view does not sit still. You can even see how different investors reach very different fair values for the same stock. For example, one Narrative might assume a far higher fair value than another that is more cautious about future growth and profitability.
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.
Companies discussed in this article include BYD.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
