We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day, a decline in earnings estimate revisions is starting to make it clear why investors may want to stay away from Bally’s (BALY - Free Report) stock.
Rising over +20% in 2024, it may be time to take any profits in Bally’s stock as the casino and hotel operator is a ways away from being profitable despite this year’s optimism. Furthermore, BALY is still down 50% in the last three years and the return to downside risk has resurfaced after its very subpar Q3 results in November.
Image Source: Zacks Investment Research
High Operating Expenses Lead to Weak Q3 Results
Seeing its operating expenses increase by 20% year over year, Bally’s reported a Q3 net loss of $247.86 million or -$1.99 a share. This widely missed Zacks estimates which called for a Q3 adjusted loss of -$0.25 a share while contracting from EPS of -$1.15 in the comparative quarter.
On the top line, Q3 sales of $629.97 million dipped from $632.48 million a year ago and missed estimates of $650.63 million by -3%. More concerning is that Bally’s has missed earnings expectations in three of its last four quarterly reports and has been short of sales estimates for six consecutive quarters.
Image Source: Zacks Investment Research
Industry Weakness & Regulatory Scrutiny
Operating in a competitive landscape, Bally’s is not alone in what has been challenging market conditions as the Zacks Hotels and Motels Industry is in the bottom 23% out of 250 Zacks industries. For hotel-casino operators specifically, regulatory scrutiny has been an issue as it’s also noteworthy that there have been ongoing investigations and inquiries into Bally’s accounting practices by the SEC.
Declining EPS Estimates
Adding fuel to the fire after Bally’s recent earnings miss is that fiscal 2024 EPS estimates had already plummeted over the last 60 days from expectations of an adjusted loss of -$6.08 a share to -$11.07. Plus, FY25 EPS is now projected at a loss of -$3.53 compared to -$3.01 two months ago.
Image Source: Zacks Investment Research
Lackluster Top Line Trajectory
What may start to sour investor sentiment for Bally’s future earnings potential is that the company is expecting less than 1% sales growth in FY24 and FY25 with projections remaining near $2.4 billion.
Image Source: Zacks Investment Research
Bottom Line
Considering there are accounting probes into Bally’s financial practices it's easy to see how investors may be inclined to look away from BALY. To that point, the trend of declining EPS estimates is very concerning as Bally's remains well below the profitability line.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bear of the Day: Bally's (BALY)
Landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day, a decline in earnings estimate revisions is starting to make it clear why investors may want to stay away from Bally’s (BALY - Free Report) stock.
Rising over +20% in 2024, it may be time to take any profits in Bally’s stock as the casino and hotel operator is a ways away from being profitable despite this year’s optimism. Furthermore, BALY is still down 50% in the last three years and the return to downside risk has resurfaced after its very subpar Q3 results in November.
Image Source: Zacks Investment Research
High Operating Expenses Lead to Weak Q3 Results
Seeing its operating expenses increase by 20% year over year, Bally’s reported a Q3 net loss of $247.86 million or -$1.99 a share. This widely missed Zacks estimates which called for a Q3 adjusted loss of -$0.25 a share while contracting from EPS of -$1.15 in the comparative quarter.
On the top line, Q3 sales of $629.97 million dipped from $632.48 million a year ago and missed estimates of $650.63 million by -3%. More concerning is that Bally’s has missed earnings expectations in three of its last four quarterly reports and has been short of sales estimates for six consecutive quarters.
Image Source: Zacks Investment Research
Industry Weakness & Regulatory Scrutiny
Operating in a competitive landscape, Bally’s is not alone in what has been challenging market conditions as the Zacks Hotels and Motels Industry is in the bottom 23% out of 250 Zacks industries. For hotel-casino operators specifically, regulatory scrutiny has been an issue as it’s also noteworthy that there have been ongoing investigations and inquiries into Bally’s accounting practices by the SEC.
Declining EPS Estimates
Adding fuel to the fire after Bally’s recent earnings miss is that fiscal 2024 EPS estimates had already plummeted over the last 60 days from expectations of an adjusted loss of -$6.08 a share to -$11.07. Plus, FY25 EPS is now projected at a loss of -$3.53 compared to -$3.01 two months ago.
Image Source: Zacks Investment Research
Lackluster Top Line Trajectory
What may start to sour investor sentiment for Bally’s future earnings potential is that the company is expecting less than 1% sales growth in FY24 and FY25 with projections remaining near $2.4 billion.
Image Source: Zacks Investment Research
Bottom Line
Considering there are accounting probes into Bally’s financial practices it's easy to see how investors may be inclined to look away from BALY. To that point, the trend of declining EPS estimates is very concerning as Bally's remains well below the profitability line.