Late Tuesday, Boyd Gaming announced that it had increased its stock-repurchase allocation by $500 million. That is in addition to the $149 million already on hand.
Deutsche Bank analyst Carlo Santarelli said, “The new authorization, when coupled with the remaining $149 mm from the prior authorization, at current levels in the stock, would allow BYD to repurchase >10% of the public float.”
Boyd has 112 million outstanding shares.
Boyd share prices spiked on the news, opening at $57.72, then trading upward to $59.37 at press time.
At the same time as the buyback announcement, Boyd declared a July 15 dividend of 15 cents per share ($110 million aggregate).
Of the repurchases, Boyd CEO Keith Smith said, “This additional share repurchase authorization further reinforces our commitment to pursuing a balanced, robust capital return program. We intend to maintain repurchase activity of approximately $100 million per quarter, augmented from time to time by opportunistic repurchases.”
Santarelli noted approvingly, “We view the increased authorization favorably and believe it should serve as a positive catalyst, while further highlighting the strength of the balance sheet.”
Crunching the numbers, he estimated that Boyd had $1 billion in free cash flow to devote to share repurchases through 2023 before it would impact the company’s net debt.
The Deutsche Bank analyst went on to observe that while Boyd owns the vast majority of its real estate outright, Boyd stock remains “relatively inexpensive” on an enterprise-value basis. (Most of Boyd’s competitors have sold their real estate and are leasing it back.)
