Capital Investments And Digital Strategy Will Shape Future Markets

Key Takeaways

• Strategic investments in property development and digital expansion aim to attract new customers, expand market share, and drive long-term revenue growth.
  
• Improved financial flexibility supports continued growth initiatives, shareholder returns, and resilience against economic and demographic risks.
  
• Accelerating digital disruption, narrow online strategy, high capital needs, geographic concentration, and rising costs threaten Boyd's long-term growth, margins, and earnings stability.

Catalysts

Operates as a multi-jurisdictional gaming company in the United States and Canada.

• Accelerated capital investments in new and renovated properties-including expansions in high-growth, underserved markets (e.g., Cadence Crossing in Nevada and Norfolk, VA)-are expected to attract new, younger experiential customers and increase visitation, supporting long-term revenue and EBITDA growth.
  
• Sustained recovery and growth in retail and unrated play segments, as more consumers with rising discretionary incomes prioritize drive-to entertainment and leisure experiences, are likely to drive top-line growth and improve operating leverage across both regional and Las Vegas local markets.
  
• Strong free cash flow and a significant reduction in leverage from the FanDuel stake sale provide greater financial flexibility to pursue high-return organic growth projects, potential acquisitions, and consistently higher shareholder returns (buybacks/dividends), all of which should enhance earnings per share and net margins.
  
• Ongoing digital strategy, focused on strengthening Boyd Interactive and leveraging extended FanDuel market access agreements, positions the company to benefit from the continued expansion of legalized online gaming and sports betting, driving incremental digital revenue and supporting margin growth.
  
• Enhanced customer base diversification through property upgrades, new amenities, and targeted regional growth reduces the company's exposure to cyclical downturns and demographic headwinds, supporting greater earnings stability and long-term margin resilience.

Boyd Gaming Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Boyd Gaming's revenue will decrease by 4.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 14.0% today to 15.8% in 3 years time.
• Analysts expect earnings to reach $556.3 million (and earnings per share of $8.39) by about July 2028, down from $564.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.8x on those 2028 earnings, up from 12.4x today. This future PE is lower than the current PE for the US Hospitality industry at 22.6x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.5%, as per the Simply Wall St company report.

Boyd Gaming Future Earnings Per Share Growth

Risks

• Boyd's long-term focus on regional land-based casinos faces a persistent risk from secular shifts toward online gaming and sports betting as digital alternatives continue to erode market share from traditional brick-and-mortar properties, threatening long-term revenue growth and legacy EBITDAR margins.
  
• The company's online gaming strategy remains narrowly regional and lacks aggressive national expansion, increasing the risk of falling behind larger, tech-savvy competitors as iGaming proliferates, which could stall digital segment growth and compress future margins.
  
• Ongoing high capital expenditures for property renovations, expansions (e.g., Virginia resort, Cadence Crossing), and new developments may constrain free cash flow, increase operational risk, and pressure returns on invested capital-particularly if project timelines slip or demand underperforms.
  
• Heavy geographic concentration in markets like Las Vegas and the Midwest exposes Boyd to local economic downturns, demographic shifts, and competitive pressures (e.g., declining destination demand, room rate wars, new supply), resulting in increased revenue volatility and weaker earnings stability.
  
• Rising wage, labor, and compliance costs in the hospitality and gaming sectors, coupled with possible future increases in regulatory burden or taxes, present ongoing risks to net margins and overall profitability, especially as a substantial portion of Boyd's customer base is older and potentially more vulnerable to shifts in discretionary spending due to macroeconomic or regulatory changes.

Valuation

• The analysts have a consensus price target of $89.923 for Boyd Gaming based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $101.0, and the most bearish reporting a price target of just $80.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.5 billion, earnings will come to $556.3 million, and it would be trading on a PE ratio of 13.8x, assuming you use a discount rate of 9.5%.
  
• Given the current share price of $85.74, the analyst price target of $89.92 is 4.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.