The shares of Boyd Gaming (NYSE: BYD) have more than doubled in value since February 2020 – primarily propelled by the sports betting and iGaming frenzy in the U.S. While Boyd offers slot and table games at its properties, Wynn Resorts (NASDAQ: WYNN) is a prominent integrated resort operator with properties in Macau, Las Vegas, and Boston. Despite Wynn Resorts’ foray into the sports betting and online gaming market, odds have not been in favor of the stock due to continued weakness in Macau’s gaming industry. Boyd Gaming’s 5% equity stake in FanDuel has been the key to the uptick in BYD stock but, WynnBET has not brought much cheer amongst investors. However, Trefis believes that Wynn Resorts is now a better pick over Boyd Gaming stock due to comparable growth and profitability metrics. Our interactive dashboard analysis on Wynn Resorts vs. Boyd Gaming: With Return Forecast Of 147%, Wynn Resorts Is A Better Bet compares a slew of factors such as historical revenue growth, returns, and valuation multiple.
- Revenue Growth
Before the pandemic, Wynn Resorts and Boyd Gaming’s growth had been almost similar, with Wynn Resorts’ revenues growing at an average annual rate of 15% from $4.3 billion in 2016 to $6.6 billion in 2019. Similarly, Boyd’s revenues grew at an average annual rate of 15% from $2.2 billion in 2016 to $3.3 billion in 2019. Due to mandated property closures and restricted travel, Wynn Resorts and Boyd Gaming reported 68% and 35% top-line contraction in 2020, respectively. While Boyd Gaming’s revenues completely recovered to pre-pandemic levels in 2021, Wynn Resorts’ topline continues to remain low due to the resurgence of coronavirus infections in China.
- Wynn Resorts Macau, Vegas, and Boston properties contribute 70%, 25%, and 5% of total revenues, respectively. Before the pandemic, the company’s Macau properties were observing strong growth assisted by tourist numbers and mass-market gaming wagers. With property closures impacting finances, Wynn Resorts launched the WynnBet sports betting application to enter the digital gaming industry.
- Boyd’s Gaming, Food & Beverage, Room, and Other segments contribute 75%, 13%, 7%, and 5% of total revenues, respectively. The company primarily earns its gaming revenues from slot machines and table games with its Midwest & South region contributing almost three-quarters of gaming volumes.
- With both companies eyeing a sizable share of the U.S. sports betting & iGaming industry, Boyd Gaming is in the business with a 5% stake in FanDuel (Flutter Entertainment’s sports betting application) and Wynn Resorts has a dedicated subsidiary, Wynn Interactive, to compete with the likes of Draft Kings and Penn’s Barstool. (related: Should Penn Stock Again Gather Investor Optimism?)
- Returns (Profits)
Wynn Resorts and Boyd Gaming’s operating margin was almost similar within the 12-14% range before the pandemic. Moreover, both companies have also been reporting similar cash generation capabilities with an operating cash margin of 14-17%. Here we are comparing the operational performance during the pre-pandemic period as Wynn Resorts is still facing pandemic blues with renewed restriction measures in China.
- In 2019, Boyd Gaming reported $3.3 billion of net revenues, $548 million of cash from operations – at an operating cash flow margin of 16%. The company invested $231 million in property & business acquisitions and utilized the rest in repaying debt.
- In 2019, Wynn Resorts reported $6.6 billion of net revenues, $901 million of cash from operations – at an operating cash flow margin of 14%. The company invested $1 billion in property, plant & equipment, paid $566 million in dividends, and raised additional long-term debt.
Both companies have large long-term debt obligations, with Wynn Resorts and Boyd Gaming reporting a debt-to-asset ratio of 94% and 61%, respectively.
- Despite a prolonged slump due to the coronavirus crisis, both companies did not incur sizable impairment charges. Notably, Boyd Gaming’s strong domestic presence and effective cost control measures limited operating losses in 2020.
- Given the sizable long-term debt obligations on Wynn Resorts’ balance sheet, cash generation capabilities are likely to be hampered by interest expenses as tourist visitations in Macau remain restricted. However, the company does not have significant debt maturities until 2024 as uncertainty looms over the global economy. (related: Why Is The Market Rewarding MGM Resorts Stock?)
|S&P 500 Return||1%||-12%||87%|
|Trefis Multi-Strategy Portfolio||2%||-15%||233%|
 Month-to-date and year-to-date as of 5/4/2022
 Cumulative total returns since the end of 2016