Boyd Gaming Reveals New $500 Million Buyback Plan

Posted on: May 5, 2023, 09:26h. 

Last updated on: May 5, 2023, 05:42h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Boyd Gaming (NYSE: BYD) unveiled a new $500 million share repurchase program on Friday, adding to the regional casino operator’s recent tradition of capital return efforts.

Boyd Gaming
Boyd Gaming’s Suncoast Hotel and Casino in Las Vegas. The company announced a new $500 million buyback plan. (Image: Vegas Means Business)

The Orleans operator said its board of directors approved the buyback plan. The news arrived in conjunction with the declaration of the gaming company’s quarterly dividend of 16 cents a share. That will be paid on July 15 to shareholders of record as of June 15.

Considering the additional authorization, the company had approximately $633 million remaining in repurchase authority as of March 31, 2023,” according to a statement issued by the Las Vegas-based gaming operator.

In the first quarter, Boyd bought back approximately $106 million worth of its own shares. The company had $263.5 million in cash on hand as of March 31, confirming its balance sheet is among the tidiest in the regional gaming space.

Boyd Buyback Binge Continues

Boyd, which runs 28 gaming venues across 10 states, including 11 in its home city, is a dedicated buyer of its own stock.

Friday’s buyback announcement arrived 11 months after the Aliante operator revealed another $500 million repurchase plan. That followed the announcement of a $300 repurchase effort announced in October 2021. Boyd previously said it intends to buy back roughly $100 million of its shares per quarter.

Said another way, if no further buyback authorizations are added, by late 2024, the casino operator will have repurchased $1.3 billion worth of its shares. That’s a significant percentage of its current market capitalization of $6.93 billion. Boyd is displaying commitment to shareholder rewards — something of a rarity these days in the gaming industry — and some analysts believe that effort will be undaunted should a recession come to pass.

“We believe we would need to witness a recessionary environment way worse than what was witnessed in 2008/2009 before BYD would have to materially change their current capital return program,” wrote Stifel analyst Steven Wieczynski in a note out last month.

Boyd Buying Back Undervalued Stock

Based on the $633 million in buyback power Boyd has, and its May 4 closing price of $68.16, the operator can repurchase 9.28 million of its shares, a significant percentage of its 105.53 million shares outstanding. The company may be getting a good deal because Wieczynski argued the stock is undervalued.

You have a company that has a massively underlevered balance sheet, strong core fundamentals, real estate optionality, and a call option around sports betting, yet trades at a discount to certain peers,” added the Stifel analyst.

The sports wagering optionality being referred to is Boyd’s 5% stake in FanDuel. That’s the largest online sportsbook operator in the US, boosting profits while adding market share.