Stock Story -
Gaming, betting and entertainment company Bally's Corporation (NYSE:BALY) fell short of analysts' expectations in Q2 CY2024, with revenue up 2.5% year on year to $621.7 million. On the other hand, the company's full-year revenue guidance of $2.6 billion at the midpoint came in 1.1% above analysts' estimates. It made a GAAP loss of $1.24 per share, down from its loss of $0.48 per share in the same quarter last year.
Is now the time to buy Bally's? Find out by reading the original article on StockStory, it's free.
Bally's (BALY) Q2 CY2024 Highlights:
- Revenue: $621.7 million vs analyst estimates of $641.8 million (3.1% miss)
- EPS: -$1.24 vs analyst expectations of -$1.22 (1.8% miss)
- The company reconfirmed its revenue guidance for the full year of $2.6 billion at the midpoint
- Gross Margin (GAAP): 54.2%, down from 55.3% in the same quarter last year
- Market Capitalization: $700.3 million
Headquartered in Providence, Rhode Island, Bally's Corporation (NYSE:BALY) is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.
Casino OperatorCasino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.
Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Over the last five years, Bally's grew its sales at an incredible 38.6% compounded annual growth rate. This shows it expanded quickly, a useful starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Bally's recent history shows its demand slowed significantly as its annualized revenue growth of 12.5% over the last two years is well below its five-year trend. Note that COVID hurt Bally's business in 2020 and part of 2021, and it bounced back in a big way thereafter.
This quarter, Bally's revenue grew 2.5% year on year to $621.7 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 5.8% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Bally's operating margin has shrunk over the last year and averaged negative 7.1%. Unprofitable, high-growth companies warrant extra scrutiny, especially if their margins fall because they're spending loads of money to stay relevant, an unsustainable practice.
This quarter, Bally's generated an operating profit margin of 1.1%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable.
Key Takeaways from Bally's Q2 Results It was good to see Bally's full-year revenue forecast beat analysts' expectations. On the other hand, its revenue and EPS fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock remained flat at $17.23 immediately following the results.
