Is There Still Upside in Boyd Gaming After Strong Five Year 105% Share Price Gain?
Wondering if Boyd Gaming is still a smart buy at around $80 a share, or if most of the upside has already been priced in? Here is a look at what the market might be missing in the current valuation.
The stock is roughly flat over the last month at $80.88, but it is still up 12.6% year to date and 105.0% over five years. This indicates the long term story has been rewarding for patient investors despite a recent 2.9% pullback over the past week.
Recent moves have come as investors digest headlines around ongoing Las Vegas and regional gaming demand, along with continued investment in Boyd’s digital and iGaming partnerships that are reshaping how the company taps into online wagering trends. At the same time, broader market debates about consumer spending and travel resilience have kept casino names like Boyd in the spotlight as potential beneficiaries if discretionary spending remains resilient.
On our metrics, Boyd Gaming scores a solid 5/6 valuation score, meaning it screens as undervalued on most of the checks we run. This raises the question of why the market is not fully reflecting that. Next, we will consider the standard valuation approaches investors rely on, then finish with a more holistic way of thinking about Boyd’s value that goes beyond simple multiples.
A Discounted Cash Flow, or DCF, model estimates what a company is worth by projecting its future cash flows and then discounting those cash flows back to today to account for risk and the time value of money.
For Boyd Gaming, the model starts with last twelve month free cash flow of about $504 million. Analysts provide several years of explicit forecasts, and beyond that Simply Wall St extrapolates a gradual growth path. Under this 2 Stage Free Cash Flow to Equity approach, free cash flow is projected to rise to roughly $728 million by 2035, based on the model’s assumptions about Boyd’s cash generating ability.
When all those projected cash flows are discounted back, the model’s estimated intrinsic value comes out at about $113.72 per share, compared with a current market price around $80.88. Under these assumptions, the shares appear to trade at roughly a 28.9% discount to the model’s fair value.
For a consistently profitable business like Boyd Gaming, the price to earnings, or PE, ratio is a useful yardstick because it links what investors pay directly to the company’s bottom line. In general, faster growing, lower risk companies deserve a higher “normal” PE, while slower growth or higher uncertainty should pull that multiple down.
Boyd currently trades at about 3.37x earnings, which is strikingly below both the Hospitality industry average of roughly 23.26x and a broader peer group around 30.60x. On the surface, that kind of discount might suggest the market is assuming materially weaker prospects or higher risk than for typical casino and leisure names.
Simply Wall St’s Fair Ratio for Boyd is 3.86x. This is its proprietary estimate of what the PE should be once you factor in things like earnings growth, profitability, industry, market cap and risk. This is more tailored than a simple comparison to peers or sector averages, which can ignore company specific strengths and weaknesses. Comparing Boyd’s actual 3.37x to the 3.86x Fair Ratio implies the stock is trading below what those fundamentals would justify.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which Simply Wall St hosts on its Community page for millions of investors: a Narrative is your own clear story about a company that connects what you believe about its business and industry to specific forecasts for revenue, earnings and margins, and then to a fair value you can compare with today’s share price to decide whether to buy, hold or sell. Narratives are easy to use because the platform turns your assumptions into a full financial forecast and fair value estimate, then keeps that narrative updated as new news, earnings or analyst revisions come in, so your view stays current without you rebuilding spreadsheets. For Boyd Gaming, one investor’s bullish Narrative might lean into expanding online gaming, stable core casinos and rising margins to support a fair value near the top analyst target of about $101, while a more cautious Narrative might focus on regulatory risk, competitive pressure and softer growth, anchoring fair value closer to the low end around $80.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
