Why did overall earnings beat expectations despite a slight revenue miss?

  • Boyd’s third-quarter 2026 revenue was approximately 990 million dollars, down 1% year over year and below Morgan Stanley’s forecast of 995 million dollars and the market consensus of 1.002 billion dollars. Consolidated EBITDAR, however, reached approximately 320 million dollars, above their respective forecasts of 317 million and 316 million dollars. The revenue shortfall came mainly from Las Vegas, while earnings were supported by cost controls in regional operations and the online and management businesses.
  • This resilience still came alongside pressure on the core business: core brick-and-mortar EBITDAR fell approximately 2% year over year, or approximately 1% after excluding one-off factors in regional operations. The core brick-and-mortar margin was approximately 38%, down approximately 0.6 percentage points year over year. Thus, the overall earnings beat coincided with declining earnings in the brick-and-mortar business.

Which businesses offset the drag from Las Vegas?

  • Regional operations generated approximately 202 million dollars of EBITDAR in the third quarter, flat year over year and slightly above Morgan Stanley and market consensus, mainly thanks to better cost controls. Excluding one-off factors such as the sale of the Shreveport asset and a 4 million-dollar increase in property tax at Kansas Star, the business’s EBITDAR rose approximately 2.5% year over year, indicating that underlying operations were stronger than the headline flat result suggests.
  • Digital business EBITDA was approximately 11 million dollars, above Morgan Stanley’s and market consensus estimates of 8 million and 9 million dollars, respectively. Management and other businesses generated approximately 30 million dollars, also exceeding expectations. Based on performance during the year, the company expects full-year online business EBITDA to be near the upper end of its 35 million–40 million-dollar guidance range, and the management business to be near the upper end of its 113 million–117 million-dollar range.

Where is the pressure in Las Vegas concentrated, and what could drive improvement?

  • The locals business generated approximately 87 million dollars of EBITDAR in the third quarter, down 5% year over year and below Morgan Stanley’s and market consensus estimates of 92 million and 89 million dollars, respectively. Disruptions from the Orleans and Suncoast projects, combined with weak tourist traffic, were the main drags. Excluding those two properties, EBITDAR in the remaining locals business rose approximately 3% year over year, showing that the pressure was not evenly spread.
  • Downtown business EBITDAR was approximately 13 million dollars, down 20% year over year and also slightly below expectations. In addition to weak tourism business, several hurricanes around Hawaii affected travel from the state to Las Vegas.
  • The company expects locals business EBITDAR to achieve modest year-over-year growth, supported by the passing of a difficult comparison period for the tourism business and contributions from the completion of the Suncoast renovation and the ramp-up of Cadence. However, the Orleans project is scheduled to begin in early 2027, and the progress of property renovations remains a factor in assessing operations.

Why does Morgan Stanley believe stability is enough to support its current view?

  • Management said revenue trends recovered in September after softening in August. Together with broadly stable core earnings, Morgan Stanley believes this supports its rationale for its recent upgrade: the current forward 12-month EV/EBITDA multiple is approximately 7 times, below the historical level of approximately 8.5 times, and the valuation reflects greater operating pressure than actual performance suggests.
  • The company repurchased approximately 165 million dollars of shares in the third quarter, above its previous plan of approximately 150 million dollars per quarter. The new Norfolk project also remains on schedule and on budget. Morgan Stanley estimates the project’s net present value at approximately 6 dollars per share, or approximately 8% of the share price at the time.
  • The bank maintains its Overweight rating and 83-dollar price target. The target uses approximately 6.5 times forward one-year EBITDAR, below the historical level of approximately 8 times, and takes the higher interest-rate environment into account. This valuation measure differs from the EV/EBITDA comparison above.