Boyd Gaming, the red-headed stepchild of the casino industry, got some love from Wall Street yesterday. JP Morgan analyst Joseph Greff wrote that “the improving free cash flow in the BYD story is not 
reflected in the current stock price, nor is it something that is currently so loved by the buy-side, and therefore we believe represents an interesting, non-consensus buy idea.” He liked Boyd’s share (40%) of the Las Vegas locals market and saw it “as a near-term way to play positive regional gaming trends as well as LV Locals trends.” Greff applauded Boyd’s acquisitions of Aliante Casino and Cannery Casino Resorts ($60 million in projected cash flow), and reported double-digit cash flow growth — a sign of strong ROI — at all of Boyd’s Vegas-area properties.
Greff did allow that there was “ongoing weakness in pockets of Louisiana ([Amelia] Belle, Evangeline Downs), offset by better results at Delta Downs and Treasure Chest.” Greff’s Deutsche Bank counterpart, Carlo Santarelli, went even farther, saying that 
Boyd stock ought to catch up with Pinnacle Entertainment and Penn National Gaming. Those two are up 43% and 34%, respectively, while Boyd shares have risen only 11%. After all, Boyd “turned in a strong 1Q17, instilling confidence in the view that guidance for the year is comfortable, if not conservative.” Santarelli wrote that Aliante and the Canneries were just a bit shy of their ROI targets, with synergies as yet unrealized.
The Vegas, Midwest and South segments were “broadly in line” with management’s guidance. The cash-flow picture might have been better still were it not for higher-than-predicted corporate expenditures. In light of its strengths, you have to wonder why the market continues to punish Boyd while rewarding Penn, which has made some real screw-ups. Then again, stock prices do not always move in a rational fashion.
* Pennsylvania casinos are at sixes and sevens over the prospect of slot routes in the Keystone State. Parx Casino wants this baby smothered in the crib. Penn National, meanwhile, thinks the state should get in on the action, and that it and its competitors should switch rather than fight. After all, Penn reasons, it’s happening anyway, so why not do it legally?
