Bally’s Stock Faces Tough Times Amid Weak Earnings and Increased Scrutiny
Bally’s Corporation, carrying a Zacks Rank #5 (Strong Sell), is facing declining earnings estimate revisions that signal caution for investors.
Despite rising over +20% in 2024, it may be wise for investors to cash in on gains as Bally’s struggles to return to profitability. The stock remains down 50% over the past three years, and the recent poor performance in Q3 has reignited concerns about downside risks.
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Weak Q3 Performance Driven by High Operating Costs
Bally’s reported a Q3 net loss of $247.86 million, translating to -$1.99 per share. This fell significantly short of analyst expectations, which had predicted an adjusted loss of -$0.25 per share and represented a decline from EPS of -$1.15 in the same period last year. Operating expenses surged by 20% compared to the previous year.
On the revenue side, Q3 sales totaled $629.97 million, down from $632.48 million a year ago, while also missing the estimated $650.63 million by about 3%. Notably, Bally’s has missed earnings expectations in three out of its last four quarterly reports and has not met sales estimates for six consecutive quarters.
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Regulatory Scrutiny and Industry Challenges
Bally’s faces tough competition as the Zacks Hotels and Motels Industry currently ranks in the bottom 23% of 250 Zacks industries. Moreover, the company is under SEC investigation regarding its accounting practices, further complicating its situation.
In light of the disappointing earnings report, EPS projections for fiscal 2024 have dropped from an anticipated loss of -$6.08 to -$11.07 per share in just 60 days. Additionally, FY25 EPS estimates have shifted to a projected loss of -$3.53 from -$3.01 two months prior.
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Future Sales Growth Looks Weak
Looking ahead, Bally’s anticipates less than 1% sales growth for FY24 and FY25, with total revenue expected to remain around $2.4 billion. This stagnant outlook may dampen investor confidence regarding the company’s earning potential.
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Conclusion
Given the ongoing SEC investigations and declining EPS forecasts, investors might want to reconsider holding Bally’s stock. The trend issues surrounding profitability suggest a challenging road ahead for the company.
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