Casino and gambling company Boyd Gaming (NYSE: BYD) released its third-quarter 2020 earnings report today, showing that while the coronavirus continues to depress results, Boyd is faring better than analysts expected. According to Zack's Equity Research, adjusted earnings per share of $0.38 easily beat Wall Street analyst expectations of $0.17, while analyst consensus revenue forecasts of $609.6 million were handily surpassed by the actual $652.2 million results.
The casino sector has been pummeled by pandemic lockdowns and health precautions during 2020, and the three months ending Sept. 30 showed only a modest decline year over year from Q3 2019. While revenue is 20.4% lower, adjusted earnings fell only 2.9% compared to last year, with adjusted EPS down just $0.01. The metrics show Boyd Gaming is functioning more efficiently, with 36.6% operating margin improving on 2019's 26.1%.
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The strong rebound is reflected in the current share price, which has recovered to the level achieved immediately before the pandemic struck. The company is also pursuing an aggressive drive into the mushrooming digital sports betting sector, potentially making it more resistant to physical casino shutdowns.
CEO Keith Smith highlighted this, saying, "we continued to build the foundation for future growth through the expansion of our partnership with FanDuel Group, successfully launching mobile sports betting platforms in Illinois and Iowa and expanding our digital reach to more than 30 million adults nationwide."
FanDuel, a subsidiary of the Irish bookmaking holding company Flutter Entertainment (LSE: FLTR), is sustained by strong cash flow, and is working at expanding into the U.S. market as an ally of Boyd, creating the potential for rising ongoing profits for both partners.
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Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of Flutter Entertainment. The Motley Fool recommends Boyd Gaming and recommends the following options: short December 2020 $32 calls on Boyd Gaming. The Motley Fool has a disclosure policy.
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