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Bally's Misses Views, But Wall Street Sees Earnings Growth In '21 and '22

Casino operator and online gaming provider Bally's missed second-quarter views, yet earnings rose 826% over the year-ago quarter. Analysts see full-ye...

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This story originally appeared on MarketBeat

After missing analysts’ views for the second quarter, casino operator Bally’s (NYSE: BALY) was trading lower Monday. 

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The company reported earnings of $0.48 per share, below the consensus estimate of $0.65 per share. That’s an improvement over the year-ago loss of $0.79 per share. 

Revenue came in at $267.7 million, a whopping 826% increase over the prior year when the company’s hotels and casinos were essentially shut down during the earliest days of the pandemic. 

Sequentially, revenue has been growing over the past four quarters, regaining business after the disastrous quarter second quarter of 2020, when revenue was only $28.9 million. Monday’s revenue exceeded views by 1.88%.

The company topped earnings views in three of the past five quarters. 

Judging by the activity over the past several months, the company is in growth mode. 

Digital and Brick-And-Mortar Acquisitions

Bally’s owns and manages 14 casinos in 10 states U.S. states, as well as a racetrack in Colorado. It operates hotels at its casino sites. The company also has access to online sports betting licenses in 14 states. 

Bally’s also owns sports betting platform Bet.Works. That acquisition closed in the second quarter. The company’s digital properties also include Monkey Knife Fight, a fantasy sports site, and SportCaller, a free-to-play game provider.

In addition, the company operates Bally Sports, a media network. It recently acquired the Association Of Volleyball Professionals, with the aim of incorporating interactive content into beach volleyball. 

In June, Bally’s struck a deal with the WNBA’s Phoenix Mercury for sponsorship and sports betting. 

Bally’s is in the process of acquiring a high-profile property, the Tropicana Las Vegas. 

According to the company, “The purchase price for the Tropicana property's non-land assets is $150 million. In addition, Bally's has agreed to lease the land underlying the Tropicana property from GLPI for an initial term of 50 years at annual rent of $10.5 million, subject to increase over time.”

Bally’s is also completing the construction of a casino in State College, Pennsylvania. 

In April, the company said it would combine with U.K.-based online gaming operator Gamesys Group. The deal is expected to close in the fourth quarter. 

Earnings Growth Ahead?

Historically, Bally’s earnings have been erratic. For example, earnings slowed prior to the casino closures in 2020, and Bally’s suffered losses in 2014 and 2017. 

Analysts expect the growth in acquisitions and digital gaming to pay off for investors. Wall Street is eyeing earnings per share of $1.73 this year, up from last year’s loss of $0.11. Next year, that’s seen rising to $3.02 per share.

Bally’s has a market capitalization of $2.285 billion. It’s tracked in the Russell 2000 small-cap index. As such, it’s included in the iShares Russell 2000 ETF (NYSEARCA: IWM), which holds 731,474 shares. Although that sounds like a pretty big number, Bally’s shares comprise only 0.06% of the index. 

The ETF with the largest holding of Bally’s, by percentage, is the Roundhill Sports Betting & iGaming ETF (NYSEARCA: BETZ), which owns 132,598 shares, constituting 1.96% of fund assets.

Bally’s is part of the Leisure/Gaming-Equipment industry. The industry, home to price leaders such as Golden Entertainment (NASDAQ: GDEN), Century Casinos (NASDAQ: CNTY) and Red Rock Resorts (NASDAQ: RRR). 

Bally’s is up 6.47% year-to-date and 128.06% in the past 12 months. That meager 2021 performance is due to the current consolidation, which began in late March. 

The stock traded below its 200-day moving average in mid-July and only regained that line Friday. The stock’s chart has been on the sloppy side for a long time, with the character of trading changing on a regular basis, going from tight intraday swings to larger spreads, indicative of some disagreement among buyers and sellers.

At this juncture, a buy is risky. Investors would be wise to wait until the stock is able to gather some steam to the upside. 

Ballys Misses Views, But Wall Street Sees Earnings Growth In 21 and 22