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The total return for Boyd Gaming (NYSE:BYD) investors has risen faster than earnings growth over the last three years

Boyd Gaming Corp. (NYSE:BYD) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But that doesn’t change the fact that the returns over the last three years have been very strong. The share price marched upwards over that time, and is now 123% higher than it was. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.

In light of the stock dropping 5.0% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company’s positive three-year return.

Though if you’re not interested in researching what drove BYD’s performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Boyd Gaming was able to grow its EPS at 67% per year over three years, sending the share price higher. The average annual share price increase of 31% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.20.

The graphic below depicts how EPS has changed over time (unveil the exact values ​​by clicking on the image).

earnings-per-share-growth
NYSE:BYD Earnings Per Share Growth September 5th 2022

We know that Boyd Gaming has improved its bottom line over the last three years, but what does the future have in store? Este free interactive report on Boyd Gaming’s balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Boyd Gaming, it has a TSR of 125% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly increased the total shareholder return.

A Different Perspective

While it’s never nice to take a loss, Boyd Gaming shareholders can take comfort that, including dividends, their trailing twelve month loss of 12% wasn’t as bad as the market loss of around 18%. Longer term investors wouldn’t be so upset, since they would have made 15%, each year, over five years. It could be that the business is just facing some short-term problems, but shareholders should keep a close eye on the fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we’ve identified 2 warning signs for Boyd Gaming (1 doesn’t sit too well with us) that you should be aware of.

But note: Boyd Gaming may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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