{"id":858234,"date":"2024-04-26T11:20:16","date_gmt":"2024-04-26T18:20:16","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/shop\/?p=858234"},"modified":"2024-04-26T11:20:20","modified_gmt":"2024-04-26T18:20:20","slug":"durango-carries-vegas-boyd-disappoints","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/blog\/durango-carries-vegas-boyd-disappoints\/","title":{"rendered":"Durango carries Vegas; Boyd disappoints"},"content":{"rendered":"\n

Gambling revenues hit<\/strong> a bit of a speed bump on the Las Vegas Strip<\/strong>, inching downwards after a March that saw flat visitation, with tourists making up for a worrisome, 37% plunge in convention attendance. Strip casinos won $716 million, a 1% declivity from last year. The Strip’s saving grace was baccarat, with the house playing lucky: Win was up 74% despite 4% less wagering. (A bad month at baccarat can break a quarter.) Slot winnings of $401.5 million were 4% higher despite flat coin-in, while table games winnings plummeted 15% to $203 million, on 7.5% less money wagered. It definitely hurt to not have the CON\/AGG<\/strong> expo this year, nor the NCAA<\/strong> college basketball tournament. Strip hotel rates felt the pinch, down 17% on 85% occupancy (92% on weekends), even though rates were still 31% higher than in pre-Covid times. Some cold consolation could also be had in auto traffic from California<\/strong> that was 1% higher than last year and air traffic that was not only 2% higher but 14% above 2019.<\/p>\n\n\n\n\n\n\n\n

Downtown<\/strong> got walloped, its $76 million take a 13% downdraft. High airfares from Hawaii <\/strong>didn’t help. The Boulder Strip<\/strong> also got hammered, -9% to $78 million. Indeed, the only locals jurisdiction to keep its pecker up was miscellaneous Clark County<\/strong> (read<\/em>: Durango<\/strong> Resort<\/strong>), which was +6.5% to $167 million. North Las Vega<\/strong>s slipped 4% to $26 million, Mesquite<\/strong> was flat at $19 million and yet Laughlin<\/strong> managed a 2% climb to $49.5 million. Things were quite copacetic in economic barometer Wendover<\/strong>, hopping 7% to $25 million, whilst Reno<\/strong> fell 6% to $52 million. That left Lake Tahoe<\/strong>, -5.5% lower to $16 million.<\/p>\n\n\n

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Whistling past the graveyard<\/strong> may have been what Boyd Gaming<\/strong> executives were doing vis-a-vis Durango Resort. They claimed the newcomer wasn’t hurting them\u2014but how else to explain the doleful numbers above, or the earnings miss that Boyd reported soon thereafter. Wrote J.P. Morgan<\/strong> analyst Joseph Greff<\/strong>, hardly a doomsayer, “There is no way to sugarcoat BYD\u2019s 1Q24 earnings miss. It was broad based and very surprising<\/em>.” He blamed low-end gaming consumers, an area in which Boyd has reported softness ever since Covid-19<\/strong> hit. While Greff was relatively dismissive of Durango’s impact on Boyd’s Las Vegas<\/strong> casinos, he was “nervous” about low-end play, as well as revived promotional warfare in Sin City. Greff’s price target for BYD shares went all the way down to $67\/share from $80, while his rating of the stock was lowered a notch to “Neutral.”<\/p>\n\n\n\n

“While the optimist in us would point to easier year-over-year comparisons going forward, we struggle to find a reason why this consumer would be stronger in the 2Q24 through the rest of this year versus the last 12 months<\/em>,” Greff wrote of the marginal, absent gamblers. Where Wall Street<\/strong> expected $231.5 million in revenue from Vegas locals, Boyd delivered $225.5 million, down 6% from 1Q23. Downtown was supposed to bring home $58.5 million but offered up $53.5 million instead, with emaciated cash flow, too. Cash flow was lackluster in the Midwest and South, too, but revenue was solid: $501 million, just what Greff anticipated. Indeed, he called it the “best performance in nearly 2 years<\/em>.” Boyd should also get an incremental lift from the June opening of drastically revamped Treasure Chest<\/strong>, near New Orlean<\/strong>s. (In Kenner<\/strong>, technically.)<\/p>\n\n\n

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Internet gambling was a bright spot, bringing home $146 million of bacon where Wall Street anticipated $132 million, while e-cash flow was on the button. Sky River Casino<\/strong>, in California<\/strong>, continues to outperform under Boyd management. In spite of the disappointing returns, Boyd paid out a small dividend and bought back $105 million worth of stock. In addition to Treasure Chest, Boyd has also embarked on a wide-ranging program of capex maintenance that includes upgrades at Blue Chip<\/strong>, Ameristar St. Charles<\/strong>, Gold Coast<\/strong>, The Orleans<\/strong> and Valley Forge Resort<\/strong>.<\/p>\n\n\n\n

Exercising diplomacy, Deutsche Bank<\/strong> analyst Carlo Santarelli<\/strong> termed the 1Q24 results “challenging.” However, he dropped his rating to “Hold” from “Buy.” He also shaved seven bucks off his $78\/share price target. Metaphorically shaking his head, Santarelli wrote, “While we still view\u00a0BYD\u00a0as a strong relative value play within the Gaming sector, we struggle, at this time, to identify; 1) near term catalysts, 2) a change in the cadence of property level results, or 3) an event that triggers a re-rating in shares, though a sale, or partial sale, of the FanDuel<\/strong> stake would certainly be multiple enhancing<\/em>.” Let’s hope they don’t do that: It’d be like killing the golden goose in order to make lunch. The Deutsche Bank boffin was skeptical of cash-flow growth, citing slowing momentum amongst Las Vegas gamblers, higher costs and regional performance that was “grinding lower.”<\/p>\n\n\n

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Savage weather in January burnt a bigger hole in Boyd’s finances than anticipated, with Santarelli chronicling the “despite the favorable commentary around the subsequent months, we simply don’t see much to merit conviction in a\u00a0consumer re-accelaration in drive-to gaming markets, over the near term<\/em>.” Attributing as much as $20 million in monthly gambling revenue to Durango (Boyd execs fessed up to $20 million to $25 million in cannibalization), Santarelli contended that it was probably giving Boyd as much headwind as anybody else “with the Strip adjacent assets performing a bit worse<\/em>.” Upstart regimes at The Rio<\/strong> and Palms Casino Resort<\/strong> were also believed to be giving Boyd fits in the form of renewed promotional warfare, as well.<\/p>\n\n\n\n

“While regional comparisons are undoubtedly easier, we struggle to see how the gaming consumer of tomorrow is better than the gaming consumer of yesterday, and as such, we think a slowing of declines is the likely scenario<\/em>,” Santarelli wrote, turning his gaze to the hinterlands. He also felt Boyd bosses would take advantage of the stock’s debility to snap up even more shares.<\/p>\n\n\n

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Truist Securities<\/strong> analyst Barry Jonas<\/strong> opined that he liked Boyd still “f<\/strong>or low leverage, real estate ownership, continued capital returns, and its 5% FanDuel … ownership<\/em>.” He also seemed to put more stock, pardon the pun, in the Durango Effect, while also citing the renewed promo wars. He said Boyd hasn’t responded aggressively to Durango … but that others have been less restrained. In light of Boyd’s description of locals play, he thought Station Casinos <\/strong>and Golden Entertainment<\/strong> might be “more cautious” in their respective earnings calls. In closing, Boyd promised post-January “growth and steadiness” from its regional outposts. Let’s hope they’re right.<\/p>\n","protected":false},"excerpt":{"rendered":"

Gambling revenues hit a bit of a speed bump on the Las Vegas Strip, inching downwards after a March that saw flat visitation, with tourists making up for a worrisome, 37% plunge in convention attendance. Strip casinos won $716 million, a 1% declivity from last year. The Strip’s saving grace was baccarat, with the house […]<\/p>\n","protected":false},"author":83928,"featured_media":858236,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1728],"tags":[],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.lasvegasadvisor.com\/shop\/wp-content\/uploads\/2024\/04\/Copy-of-Durango-Casino-_-Resort-South-1-scaled.jpg?fit=2560%2C1707&ssl=1","_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/posts\/858234"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/users\/83928"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/comments?post=858234"}],"version-history":[{"count":1,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/posts\/858234\/revisions"}],"predecessor-version":[{"id":858243,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/posts\/858234\/revisions\/858243"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/media\/858236"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/media?parent=858234"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/categories?post=858234"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/shop\/wp-json\/wp\/v2\/tags?post=858234"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}