Bally’s Stock Surges on Boosted Q2 Revenue Guidance, Gamesys Updates

Bally’s (NYSE:BALY) stock is soaring Monday after the casino operator lifted its second-quarter revenue estimate ahead of Wall Street consensus.

 

The Rhode Island-based company said it expects sales for the April through June period to come in at $258 million to $268 million. That’s on adjusted earnings before interest, taxes, depreciation and amortization of $80 million to $84 million.

 

Analysts were expecting second-quarter sales of $225.38 million. The new forecast compares with revenue of $28.9 million and an EBITDA loss of $10.7 million a year earlier.

 

Because of last year’s casino shutdowns caused by the coronavirus pandemic, industry earnings and revenue plunged. As such, analysts are looking to 2019 as a comparison for this year’s earnings reports. Bally’s said it’s unable to offer net income guidance for the June quarter at this time because it’s in the process of quarterly closing procedures.

 

Over the past 90 days, two analysts raised earnings per share (EPS) estimates on the gaming company, while another pair trimmed those forecasts. In three of the prior four quarters, Bally’s beat EPS and top-line projections.

 

The company didn’t announce a date for the earnings report. But given the dates of the operator’s prior earnings updates in relation to quarter ends, it’s possible the second-quarter numbers will arrive in the first half of August.

 

Gamesys Acquisition Update

Earlier this year, Bally’s offered $2.7 billion to purchase British online gaming firm Gamesys in the suitor’s largest acquisition to date. That’s saying something because Bally’s is one of the most acquisitive operators in the industry.

 

That deal earned praise on Wall Street because it plugs gaps in Bally’s product portfolio while giving it a ready-made platform with which to push further into the fast-growing iGaming space. Fortunately for investors, Bally’s isn’t planning to issue equity or draw on available credit to finance the Gamesys buy, and that may be another reason the stock is soaring today.

 

As a result of better than expected operating performance at its land-based retail casinos and interactive businesses, Bally’s does not plan to issue incremental common equity or draw on the previously disclosed Gaming and Leisure Properties, Inc. commitment to fund the Gamesys acquisition,” according to a statement.

 

“Bally’s continues to evaluate investment options with potential strategic partners, and such investment is not necessary to fund the Gamesys acquisition,” the statement continued.

 

In April, Bally’s said it was mulling the sale of equity-backed securities to an unnamed strategic investor that made an unsolicited offer to procure funds for the purchase.

 

“Bally’s intends to seek to refinance the bridge facility and its and Gamesys’ debt through one or more capital market transactions, which are currently expected to include public or private bond offerings and a company-wide bank credit facility,” said the operator today.

 

Landscape for Bally’s Stock

Many on Wall Street and within the investment community view Bally’s as a play on the growth of online sports wagering and internet casinos. The company is taking a pragmatic approach to enter those markets, meaning land-based casinos will do the heavy lifting in terms of earnings and revenue for the time being.

 

Currently, the company runs 14 casinos in 10 states. That number will grow to 16 in 11 states pending closure of the purchase of Tropicana Las Vegas and construction of a gaming venue in State College, Pa.