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business newsSilver Lining: Bally's Hits Triple 7s
Company gambles, beats estimates.
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There are, however, legions of people that are the polar opposite of me. If two flies were sitting still, they’d bet on which would fly first.
And then there are those that gamble for entertainment, like like my grandmother used to. In her day, she bought Mr.Trump more than a few pairs of new shoes.
Gambling is pretty much engrained in our psyche. And although the economy may have put a dent in American’s willingness to wager, I truly believe it will come back in a big way once the economy firms up.
This takes me to Bally’s Entertainment (BYI) , which makes stuff like slot machines.
The company comes to mind given the good news it offered up after the bell last night., which revolved around its second-quarter results.
In the period ended December 31, 2008, the Las Vegas-based company earned $0.59 a share, which was $0.04 north of what analysts had been figuring on. Improvements in both gross and operating margin helped gas the results.
In conjunction with its numbers, it offered fiscal ’09 guidance of $2.15 to $2.35 a share. Some may have a problem with that. After all, it’s a narrowing from the $2.15 to $2.45 a share its guidance gave out back in November 2008 along with its first-quarter results.
However, at the end of the day, I think that’s a good range, given that the shares trade at about $20 and change. Its low price (to guided earnings) also stands out to me, given the company is expected to show a low double-digit improvement in EPS from fiscal ’09 to fiscal ’10 (from $2.25 to $2.48 a share).
I should point out that the range offered is essentially in line with the $2.25 a share the Street is looking for.
Other positives that I think are worth pointing out:
1. Per the release: “During the second quarter of fiscal 2009, the Company repurchased approximately 740,000 shares of its common stock for approximately $16 million.”
My take is that it wouldn’t be spending precious capital on the shares unless it thought they were a good value.
2. From a big picture perspective, it has a long and storied operating history and traces its roots back to the 1930s. I see this as a plus during these trying times.
Bottom line: This quarter was good news, and the company will -- in spite of the lackluster near-term outlook for the gaming industry -- be on my radar screen.
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