{"id":8879,"date":"2012-04-25T15:55:19","date_gmt":"2012-04-25T23:55:19","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=8879"},"modified":"2020-09-05T06:16:32","modified_gmt":"2020-09-05T14:16:32","slug":"wall-street-to-boyd-bleah-blood-gore","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wall-street-to-boyd-bleah-blood-gore\/","title":{"rendered":"Wall Street to Boyd: “Bleah!”; Blood & Gore"},"content":{"rendered":"

\"\"It was a thankless day for Boyd Gaming<\/strong>: It exceeded Wall Street<\/strong>‘s expectations for 1Q12 and stock analysts yawned in the company’s face. Wrote Deutsche Bank<\/strong>‘s Carlo Santarelli<\/strong>, “the fundamental setup … remains tough,” due to a highly competitive locals market in Las Vegas<\/strong>, where Boyd has lost market share, and the incoming impact of Revel<\/strong> in Atlantic City<\/strong>. Despite “largely encouraging” results, particularly “prudent” acquisition IP Biloxi<\/strong> (which accounted for almost 10% of first-quarter cash flow), at Delta Downs<\/strong> and aboard Treasure Chest<\/em>, Santarelli thought the stock fairly valued at $8\/share. Management believes if run rates at IP can be maintained, its purchase price will fall below 7X cash flow, making it a relative bargain.<\/p>\n

If Santarelli played Good Cop, J.P. Morgan<\/strong>‘s Joseph Greff<\/strong> was definitely Bad Cop, damning Boyd’s profitability as “modestly disappointing,” shaving a couple of points off his cash-flow projections and predicting a big drop-off in share price by year’s end — even though the earnings report surpassed his own forecasts! He put much of the blame on Boyd’s lack of new-revenue prospects and the fact that two-thirds of its properties are in glutted markets. “Over-valued,” he calls the company, although he did find a silver lining … for Pinnacle Entertainment<\/strong>: “continued stabilization of regional [gambling] trends” bodes well for Pinnacle’s Midwest and South portfolios, although apparently not for Boyd’s.<\/p>\n

\"\"Poor table hold<\/strong>, higher marketing and operating expenses, and flat play all bedeviled Boyd’s Vegas operations. Its Downtown<\/strong> casinos continue to exponentially outperform Glitter Gulch as a whole. Smooth sailing is foreseen for Borgata<\/strong>‘s near term, as it continues to outpace Atlantic City overall by 50%, representing 29% of Boyd’s 1Q12 cash flow and largest single market. Only Caesars Atlantic City<\/strong> and Harrah’s Marina<\/strong> do comparably well, and Resorts Atlantic Cit<\/strong>y is the worst underachiever. (At least Wall Street has finally shut the hell up about Boyd selling the biggest cash cow in its barn.) However, once Revel is fully operational, a 6%-8% decline in Borgata casino revenue is predicted by Santarelli, while Greff projects a 10% declivity. Long-term debt is expected to creep downward this year and next, going from $3.2 billion to $2.9 billion.<\/p>\n

\"\"Although the name “Al Gore”<\/strong> is a favored cheap shot (as though there were something inherently hilarious about the man) for intellectually moribund Las Vegas Review-Journal<\/em> editorial-page yokels, Boyd’s grim reception on Wall Street would strike a chord with the former vice president. He’s been talking up “sustainable capitalism,” which — contrary to what one might immediately think — promotes long-term investment strategies. Generation Investment Management<\/strong> General Partner David Blood<\/strong> (left<\/em>), late of casino owner Goldman Sachs<\/strong>, is Gore’s esquire in this new crusade. “Today the average mutual fund in the U.S. turns over its entire portfolio every 7 months; 20 years ago it was every 7 years<\/em>,” Blood asserts.<\/p>\n

Decrying “short-termism,” which focuses on instant profitability and leads to unsound investment strategies, the duo is putting forward a five-point plan. Its main tenet would be to phase out quarterly earnings guidance — the sort of thing that often leads to companies getting thumped when the actual numbers don’t jibe with the guidance.<\/p>\n

\"\"The Gore\/Bloom proposal would certainly find a friendly reception among Boyd executives feeling bloodied by this morning’s earnings call. Also, quarterly reporting requirements and a short-term-results fixation on Wall Street were prominent — nay, predominant — reasons that both then-Harrah’s Entertainment<\/strong> and Station Casinos<\/strong> used to rationalize their LBOs, ill-fated and grotesquely ill-timed though they were. The only aspect in which Gore and Blood sound naive is suggesting that bonus awards are excessively year-to-year oriented. My experience with the gaming sector has been that any relationship between bonuses and actual performance, long- or short-term, is largely coincidental.<\/p>\n","protected":false},"excerpt":{"rendered":"

It was a thankless day for Boyd Gaming: It exceeded Wall Street‘s expectations for 1Q12 and stock analysts yawned in the company’s face. Wrote Deutsche Bank‘s Carlo Santarelli, “the fundamental setup … remains tough,” due to a highly competitive locals … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[23,60,28,142,51,14,81,7,84,35,30,111,25,57,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/8879"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=8879"}],"version-history":[{"count":3,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/8879\/revisions"}],"predecessor-version":[{"id":27915,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/8879\/revisions\/27915"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=8879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=8879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=8879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}