Boyd Gaming optimistic about Las Vegas locals market

15 June 2015

In April, Boyd Gaming Corp. CEO Keith Smith said customer spending in Southern Nevada was on an upswing, which bodes well for the company’s three Coast Casinos properties and Sam’s Town Hotel & Gambling Halls.

“There is still considerable room for improvement with the consumer and we need to see more durability,” Smith said during Boyd’s first quarter earnings conference call. “But the trends are encouraging and continue to move in the right direction.”

Earlier this month, Boyd’s stock price went over the $15 per share mark, a 52-week high. In the last three months, the company’s stock value is up 7 percent, but it’s also up more than 35 percent from a year ago.

A research report by Credit Suisse gaming analyst Joel Simkins also helped boost investor confidence. Simkins raised Boyd’s target price to $18 a share.

“We believe the Las Vegas locals market is gradually improving,” Simkins said. “Boyd will continue to benefit from the rising tide of employment in and around Las Vegas as the Strip reoccupies and economic activity gains steam.”

Smith cited a strengthening in the Southern Nevada economy, adding that the local population is growing, more people have jobs, visitation is rising and consumers are spending more. His remarks echoed similar comments made in May by Station Casinos officials. The company is Boyd’s chief rival in the locals market.

When asked about Wynn Resorts Ltd. Chairman Steve Wynn’s well-publicized remarks that Las Vegas was “weak” and there weren’t overbearing signs of an economic recovery, Smith said proof was in the numbers. Boyd is seeing “continued growth throughout” the locals business, especially in nongaming areas.

“Results of The Orleans and Gold Coast Hotel and Casino were solid in the first quarter with growth in gaming and nongaming revenue at both properties,” Smith said.

Boyd Gaming is multi-jurisdictional. The company has 21 casinos in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. In Atlantic City, Boyd operates the market-leading Borgata Hotel Casino and Spa and owns half of the property (the other 50 percent is owned by MGM Resorts International).

Simkins said there are several reasons for investors to be optimistic about Boyd Gaming besides the improving Las Vegas locals market. There has been stabilization in the south and Midwest regional gaming markets and Borgata reigns atop challenged Atlantic City.

“Borgata is gobbling up (market) share in Atlantic City,” Simkins said.

All the signs lend credence to Boyd attaining its projected 2015 cash flow of between $542 million and $567 million.

The Boyd locals casinos, coupled with its three downtown properties, account for 21 percent of the cash flow projections.

Simkins said Boyd remains “indifferent” to the highly volatile baccarat trends that move the monthly gaming revenue needle of the Strip. The start of construction on the $4 billion Resorts World Las Vegas and continued strong Strip visitation numbers boost Boyd’s prospects.

“As long as the tide is rising on the Strip, including better employment, tourism and hotel room rates — allowing Boyd to push average daily room rates at its off-Strip locations — Boyd should benefit,” Simkins said.

As for the Las Vegas housing market — a key indicator for the health of the locals casino industry — Simkins said it will be “many years” before it approaches the heights experienced in 2006 and 2007.

The good news is that median home prices of approximately $212,000 — a nearly 11 percent year-over-year increase — makes home buying “a very affordable” proposition for younger buyers, families and retirees.

“(That) should help drive population growth long-term, making Boyd a key beneficiary of this trend,” Simkins said.

The other good news on the local front for Boyd, which has nearly 18,300 employees nationwide, is that zero new locals casinos are on the drawing board. Competition for the locals customer remains in place among Boyd, Station Casinos, the Cannery Casino Resorts properties, M Resort, Rampart Casino Resort at Summerlin and Arizona Charlie’s.

“The most desirable (casino) locations are spoken for and there is limited appetite for new projects,” Simkins said.

Boyd Gaming officials said last year the company began evaluating a split of its casinos into a real estate investment trust. No decision has been reached. REIT discussions often cause movement in stock prices in either direction.

Simkins doesn’t see a REIT in Boyd’s near future.

“Given that activist involvement has died down and gaming REITs as an asset class are still taking time to prove out, we don’t see Boyd choosing this path near-term,” he said.

Related Links
MGM Resorts International Ownership Details
Wynn Resorts Ownership Details
Gold Coast Hotel and Casino Details
The Orleans Details
Rampart Casino Resort at Summerlin Details
Sam's Town Hotel & Gambling Hall Details
Borgata Hotel Casino and Spa Details
M Resort Details
Nevada Gambling


Copyright GamingWire. All rights reserved.
Featured Vendors
Casino Essentials
RSA Executive Search
Casino Essentials
The Ultimate Online Training Platform for the Casino Industry
RSA Executive Search
A Boutique Search firm specializing in the Recruitment of Hospitality and Gaming Entrepreneurs
Gaming Tickets, Inc.
Casino Schedule Ease
Gaming Tickets, Inc.
35 years in the gaming industry - premium quality slot tickets, lottery tickets on time under budget
Casino Schedule Ease
Get a 90-Day Free Trial of 100% contactless, customizable table game & full casino scheduling
TribalHub
Slot-Tickets Worldwide
TribalHub
22nd Annual TribalNet Conference & Tradeshow Nov 8-11, 2021 Gaylord Texan Resort, Grapevine TX
Slot-Tickets Worldwide
Slot-Tickets® Worldwide, The Original and Still the Best.
Sunkist Graphics, Inc.
Castle Merchandising Inc
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more
Castle Merchandising Inc
Brand Name Products for your Player Rewards and Loyalty Programs
Bar Maid Corporation
Elite Gaming USA
Bar Maid Corporation
Clean and dry thousands of chips, dice and tiles per hour with the high-speed CHIP CHAMPION machine!
Elite Gaming USA
Provides a diverse inventory of refurbished gaming equipment and supplies from top manufacturers
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Slot Machines Unlimited
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Breathe easier during COVID-19. We can help you reopen smokefree for everyone’s health.
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
Betson Imperial Parts & Service
Rymax Marketing Services, Inc.
Betson Imperial Parts & Service
You one stop shop for all your gaming and OEM needs!
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI


Your Guide to 15,754 Gaming Industry Suppliers