Bally’s Bullish on 2021, Highlights Strong January, February Trends, Stock Slumps

Posted on: March 4, 2021, 11:42h. 

Last updated on: March 4, 2021, 12:40h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bally’s Corp. (NYSE:BALY) stock is joining the rest of the gaming space and the broader market to the downside Thursday. But the company is enthusiastic about its 2021 outlook.

Bally's stock
Bally’s Atlantic City. The company missed fourth-quarter sales estimates, but it’s optimistic on 2021. (Image: Press of Atlantic City)

Earlier Thursday, the Rhode Island-based gaming company said it earned 61 cents a share on sales of $118.1 million in the fourth quarter. Analysts expected earnings of seven cents on revenue of $123.43 million. Capacity and health restrictions stemming from the coronavirus pandemic hampered the operator’s results, but net income surged 51.4 percent year-over-year to $20.2 million. Bally’s generated cash from operating activities of $17.8 million.

In late trading, Bally’s stock is lower by almost 13 percent as growth stocks, of which the name is one, slide amid an ongoing spike in 10-year Treasury yields. Earlier today, yields on the benchmark US government bond topped 1.50 percent.

Further pressuring riskier assets today were ambiguous comments from Federal Reserve Chairman Jerome Powell regarding the central bank’s plan to deal with rising rates. Market participants were hoping for more direct, forceful remarks.

Bally’s Stock Outlook Still Sound

As is the case with all domestic gaming companies, Bally’s contended with COVID-19 restrictions over the course of 2020, including the final three months. But the operator joins rivals in signaling some optimism for 2021.

Though fourth quarter results were impacted by various regional capacity and health limitations, most notably in Rhode Island, we expect to benefit from a strong rebound in demand across our properties, as well as the operational efficiencies and strong margin improvements that we have seen as a continuing trend since re-opening from the pandemic,” said CEO George Papanier in a statement.

Adding to that encouraging commentary, Papanier pointed to “preliminary results show markedly stronger consumer demand in January and February.”

The gaming company didn’t offer up specific financial forecasts for the current quarter or 2021. As of Dec. 31, Bally’s has $123.4 million in cash on hand and access to a $215 million credit revolver. None of the operator’s debt matures before 2024.

Talking Deals

Bally’s is one of the most acquisitive companies in the gaming industry, and it lived up to that billing in the fourth quarter. In the last three months of 2020, the casino operator closed the purchase of its namesake venue in Atlantic City, while announcing the $125 million purchase of sports betting platform provider Bet.Works and an $85 million media partnership with Sinclair Broadcast Networks.

In January, Bally’s said it’s buying daily fantasy sports (DFS) firm Monkey Knife Fight (MKF) and last month, it said it’s acquiring free-to-play games provider SportCaller.

“The acquisition of SportCaller will enable the Company to use free-to-play games as an additional player engagement and retention tool in states that authorize sports betting, and expand the Company’s strong geographic presence beyond national borders, as SportCaller has more than 100 games in over 20 languages, and over 30 sports across 37 countries,” according to Bally’s.

Accounting for yet-to-close deals, the company will operate 15 casino locations in 11 states.