Why Boyd Gaming (BYD) Is Up Today

NEW YORK (TheStreet) -- Boyd Gaming (BYD) was gaining 15.4% to $13.63 Tuesday after activist hedge fund Elliott Associates disclosed its stake in the casino operator.

The hedge fund currently holds 4.99% of Boyd's common stock, with a 2.05% exposure to common shares via derivatives. Combined the Elliott says it has 7% economic exposure to Boyd, with 4.99% voting power.

By disclosing its stake in the company Elliott can seek meetings with Boyd's board or its management to discuss strategic alternatives. The hedge fund said it has no current plan or proposal to meet with management.

Recent investments by Elliott include Juniper Networks (JNPR) and Riverbed Technologies (RVBD).

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TheStreet Ratings team rates BOYD GAMING CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BOYD GAMING CORP (BYD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 9.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 95.79% and other important driving factors, this stock has surged by 72.71% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • BOYD GAMING CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BOYD GAMING CORP continued to lose money by earning -$0.87 versus -$10.30 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.87).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 94.7% when compared to the same quarter one year prior, rising from -$899.90 million to -$47.34 million.
  • 37.81% is the gross profit margin for BOYD GAMING CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.94% is in-line with the industry average.
  • You can view the full analysis from the report here: BYD Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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