LaraBelova
Mizuho Securities called out Boyd Gaming (NYSE:BYD) and Red Rock Resorts (NASDAQ:RRR) as intriguing picks in the casino sector ahead of the Q2 earnings season.
Analyst Ben Chaiken thinks trends are sequentially improving for both casino operators. The firm updates Q2 earnings estimates for both RRR and BYD and believes both companies offer relatively compelling set-ups into the earnings releases.
“Following what was largely a disappointing 1Q (including multiple downgrades for BYD) market-wide trends appear to have sequentially improved, yet sentiment still feels reserved. High level, April and May Las Vegas locals market revenue has improved relative to 1Q, with April and May locals revenue up 16.3% and 5.1% YoY, respectively (vs 2.9% in the 1Q period). We also consider that the Balance of County segment represented the largest YoY growth within locals (+24.5% in YoY April and +12% YoY in May), which we estimate accounts for ~45% of RRR slot weighted revenue and ~30% for BYD. With this in mind, we find RRR particularly compelling into 2Q.”
While Boyd Gaming (BYD) and Red Rock Resorts (RRR) do not generate the same buzz as glitzy casino stocks such as MGM Resorts International (MGM), Caesars Entertainment (CZR), and Wynn Resorts (WYNN), they both have consensus Buy ratings on Wall Street and with the Seeking Alpha analyst community. Notably, Boyd Gaming (BYD) and Red Rock Resorts (RRR) also pay dividends, which is not uniform across the casino sector. The dividend yield for new buyers of BYD is 1.25%, while new buyers of RRR catch a dividend yield of 1.79%. Looking ahead, Red Rock Resorts (RRR) is scheduled to report earnings on July 23, followed by Boyd Gaming (BYD) on July 25.