Boyd Gaming's 107% ROE Tells a Bigger Story — A Perfect 9/9 Buffett Score

What Is Boyd Gaming?

Boyd Gaming Corporation is one of America's largest and most geographically diversified casino operators. Founded in 1975 and headquartered in Las Vegas, the company runs 28 gaming properties across 10 states, manages a tribal casino in Northern California, and operates Boyd Interactive — its growing online casino gaming business.

Unlike the flashy Strip resorts that dominate headlines, Boyd's bread and butter is the "locals" market. Its Las Vegas properties — The Orleans, Suncoast, Sam's Town, and others — cater to repeat visitors who live in the metro area, not tourists. This creates a stickier, more predictable customer base. Outside Nevada, Boyd's Midwest and South segment spans casinos in Louisiana, Mississippi, Indiana, Iowa, Kansas, Illinois, Ohio, and Pennsylvania.

The company generates roughly $4 billion in annual revenue with operating margins above 23% and a 14% net profit margin. In 2025, Boyd completed the sale of its 5% equity interest in FanDuel to Flutter Entertainment for $1.758 billion — a transformative capital event that strengthened an already healthy balance sheet and funded accelerated share repurchases. Boyd is also building Cadence Crossing, a new locals-focused casino in Henderson, Nevada, slated to open in mid-2026.

How Boyd Gaming Scores on All 9 Buffettology Criteria

Boyd Gaming earns a perfect 9/9 on the Buffettology scoring system. Here's how it performs on each criterion.

1. High Return on Equity — PASS (107.1%)

The threshold is 12%. Boyd's 107.1% ROE dwarfs it — nearly nine times the minimum. This extraordinarily high figure reflects the combination of strong profitability, an asset-light leasing structure common in gaming, aggressive share buybacks that reduce the equity base, and the one-time FanDuel gain that boosted net income. Even normalizing for the FanDuel sale, Boyd's ROE has consistently been well above the threshold.

2. High Return on Invested Capital — PASS (11.6%)

ROIC measures how well a company uses all capital — debt and equity — to generate returns. The threshold is 9%. Boyd's 11.6% ROIC clears it, confirming the business produces returns well above its cost of capital. For a capital-intensive casino operator, this is a sign of disciplined management and strong unit economics.

3. Cash Machine — PASS (8.7% FCF/Assets)

This criterion checks whether the company generates meaningful free cash flow relative to its asset base. The threshold is 5%. Boyd's 8.7% ratio shows the business throws off cash consistently — important for a company that must reinvest in property maintenance and renovations while still returning capital to shareholders.

4. Fair Valuation — PASS (27.4% Earnings Yield)

The earnings yield (inverse of P/E) must exceed 3.5%. Boyd's 27.4% yield obliterates this bar, reflecting an extraordinarily low valuation relative to recent earnings. Even accounting for the FanDuel gain inflating the number, Boyd's trailing P/E of roughly 12x and forward P/E near 10.6x represent genuine value territory for a business of this quality.

5. Share Buybacks — PASS (-7.9% Share Dilution)

Buffett favors companies that shrink their share count rather than diluting shareholders. Boyd's share count is declining at 7.9% annually — one of the more aggressive buyback programs in the gaming sector. The company repurchased $160 million in stock in Q3 2025 alone and had $547 million remaining under its authorization as of September.

6. Defensible Moat — PASS (50.8% Gross Margin)

Gross margins above 40% indicate pricing power and a competitive moat. Boyd's 50.8% gross margin exceeds the threshold. Casino operators benefit from a unique form of moat: gaming licenses are limited by state and local regulation, properties require massive upfront investment, and customer loyalty programs create switching costs. Boyd's focus on the locals market — where relationships with regulars drive repeat visits — deepens this advantage.

7. Simple Business — PASS (Consumer Cyclical)

Boyd runs casinos that offer gaming, dining, entertainment, and hotel rooms. The revenue model is straightforward: customers gamble, eat, and stay. There's no speculative R&D pipeline or unproven technology — just a proven operating model running for nearly 50 years.

8. Conservative Debt — PASS (0.96x Debt/Equity)

The threshold is 1.5x. Boyd's debt-to-equity ratio of 0.96x is comfortably below that. Total debt stood at $1.9 billion against $319 million in cash as of Q3 2025. The FanDuel sale proceeds were used in part to pay down debt, and management has described the current balance sheet as "the strongest in the company's history."

9. Consistent Growth — PASS (345.8% Five-Year Growth)

Five-year net income growth must be positive. Boyd's 345.8% growth rate is massive, though it's important to note this includes the FanDuel gain and the recovery from pandemic-era shutdowns. Still, even excluding one-time items, Boyd has grown revenue and earnings meaningfully through property renovations, online gaming expansion, and operational efficiency improvements.

The Bull Case

The FanDuel windfall unlocks shareholder value. The $1.758 billion from selling Boyd's FanDuel stake is transformative for a $6.5 billion market cap company. Management is deploying proceeds into debt reduction and share repurchases — exactly the kind of disciplined capital allocation Buffett admires. The buyback authorization still has over half a billion dollars remaining.

The locals market is structurally resilient. Boyd's core Las Vegas locals business caters to residents, not tourists. These customers visit regularly and are less sensitive to economic cycles than leisure travelers. Las Vegas continues to grow in population, and Boyd's properties are strategically positioned in suburban corridors where new housing development is booming.

Cadence Crossing opens a new growth chapter. Boyd's new locals casino in Henderson, Nevada — set to open in Q2 2026 — addresses the fast-growing southeast Las Vegas valley. It's the first major new casino development in the locals market in years and gives Boyd a fresh property to capture demand from one of the fastest-growing residential areas in the country.

Online gaming is compounding. Boyd Interactive grew revenue 33.2% year over year in Q2 2025, reaching $173 million. The online segment gives Boyd exposure to the secular growth of iGaming without the capital intensity of building new physical properties. As more states legalize online casino gaming, this segment has a long runway.

Midwest and South segment is hitting stride. The company's largest segment posted its best third-quarter revenue and Adjusted EBITDAR performance in three years during Q3 2025. Same-store revenue grew across these properties, driven by core customer growth rather than promotional spending.

The Bear Case

The 345% growth rate is misleading. Much of Boyd's headline earnings growth comes from the one-time $1.4 billion after-tax FanDuel gain and the base effect of pandemic-era troughs. Underlying organic growth is more modest — Q3 2025 total revenue grew about 4.5% year over year, and adjusted earnings per share were essentially flat at $1.72 versus $1.52.

Same-store sales are under pressure. Boyd reported a 2.1% decline in same-store sales in Q2 2025, attributed to tough comparisons, shifting consumer behavior, and weather impacts. For a locals-focused operator, any sustained decline in visitation frequency is a warning sign that the core business may be maturing.

Consumer spending risk looms. Casino gaming is discretionary spending. If the broader economy slows or consumer confidence drops, Boyd's low-to-mid-income customer base — the locals market — may pull back. Rising insurance costs, inflation fatigue, and economic uncertainty could all weigh on gaming volumes.

EBITDAR is declining. Total Adjusted EBITDAR fell from $336.6 million in Q3 2024 to $321.8 million in Q3 2025. The online segment's contribution dropped from $26 million to $9.4 million following the FanDuel transaction restructuring. While the property segments are stable, the company hasn't yet replaced the FanDuel revenue stream.

Execution risk on Cadence Crossing. New casino developments carry construction, regulatory, and ramp-up risk. Cadence Crossing will need to attract a new customer base in a competitive locals market. If it cannibalizes existing Boyd properties rather than capturing incremental demand, the return on investment could disappoint.

Valuation Overview

Boyd Gaming trades at a trailing P/E of roughly 12.6x and a forward P/E near 10.6x — well below its historical averages and a significant discount to the broader market. For context, the S&P 500 trades at over 20x forward earnings.

Compared to gaming peers, Boyd looks inexpensive. The peer group average P/E is around 32x, putting Boyd at roughly a third of the sector multiple. Part of this discount reflects the market's cyclical concerns about regional gaming, but it also creates a margin of safety for value-oriented investors.

Simply Wall St estimates Boyd's fair value at approximately $122.83, implying roughly 44% upside from the current share price near $85. Analyst price targets range from $80 to $101, with a median target of $90 — about 6% above current levels. Several analysts recently raised their targets: Truist moved to $110 and Jefferies to $110.

The company's enterprise value relative to EBITDA is reasonable for a regional casino operator, and the aggressive buyback program at current prices represents management's confidence that shares are undervalued. Boyd also pays a quarterly dividend of $0.18 per share, providing a modest yield while the buyback does the heavier lifting on capital returns.

The Buffettology Verdict

Boyd Gaming's perfect 9/9 Buffettology score is grounded in real fundamentals: exceptional returns on equity, consistent cash generation, a shrinking share count, and a balance sheet that's the strongest it's ever been. The locals casino model provides a defensible moat through regulatory barriers and customer loyalty, and the business is simple enough to understand in a single sentence.

The FanDuel windfall is a one-time event, but how management deploys that capital — debt reduction, buybacks, and a strategic new casino — speaks to the kind of disciplined stewardship Buffett values. The bear case centers on organic growth rates and consumer spending risk, which are legitimate concerns but priced into a forward P/E under 11x.

For investors who value quality businesses trading at reasonable prices, Boyd Gaming checks every Buffett box.

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