BYD: WEAK EARNINGS AND MACRO HEADWINDS

We are below the Street for Q4 and now also for 2010.  The offsetting variable in our LV Locals Macro Model had been population growth and now that variable looks like a non-factor at best.

 

 

Q4 Preview

Q4 looks like it was tough one for a lot of the regionals, including BYD.  BYD’s exposure to the difficult Las Vegas Locals, Atlantic City and Louisiana (lately) markets probably positions the company to miss near and intermediate term estimates.  For Q4, we are projecting net adjusted EBITDA of $92.5 million which includes half of Borgata’s EBITDA.  On a consolidated EBITDA basis, EBITDA is estimated to be $82.6 million versus the Street at $88.0 million.  Our EPS estimate is $0.01, lower than the Street at $0.04.

 

 

2010

The ace in the hole of our Las Vegas Locals Macro Model was always population growth.  With continued population growth, the model spat out positive gaming revenue growth for 2010.  Now however, population and the labor force are flat at best and may even be declining.  Combine flattish population growth with stagnant unemployment and housing prices, the locals LV gaming market may struggle to expand in 2010, better than expected November numbers notwithstanding.

 

With the macro backdrop in place, we are now projecting adjusted EBITDA of $432 million and consolidated EBITDA of $392 million, essentially flat with 2009.  Our EPS estimate is $0.45 versus the Street at $0.49.

 

The Long-Term

Beyond 2010, the locals LV outlook is bright.  Given Nevada's low tax structure, the favorable climate, and cheap housing, we believe the market has significant long-term growth potential.  We may be one of the few in the investment community to view a potential acquisition of some or all of the Station Casinos assets favorably.  2010 should be the trough and could be the right time to double down on the LV locals market. 


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more