Are you ready to bet a C-note at Wall Street’s huge casino? If so, feel free to give Bally’s (NYSE:BALY) stock a try. The company just completed a transaction with Gaming and Leisure Properties (NASDAQ:GLPI), which seems to favor Bally’s. On the other hand, don’t be too enthusiastic about Bally’s, as the company’s financials are less than perfect.
Based in Rhode Island, Bally’s owns and manages 15 casinos across 10 U.S. states. The company also has interests in the online sports betting and i-gaming niche segments.
It’s not an ideal business to be involved with during a time of high inflation and recession worries. Still, as we’ll discuss momentarily, Bally’s is so out-of-favor among investors that it feels like there’s nowhere to go but up. Are you ready to spin the wheel and put $100 on the chopping block?
What’s Happening With BALY Stock?
Like many other stocks, BALY stock topped out in 2021. However, the downtrend in Bally’s shares from $70 to $20 has been particularly painful.
It takes guts to gamble one’s hard-earned capital on a stock like this. The gaming/gambling market isn’t completely finished, though. Bear in mind, Bally’s still has an extensive presence with 10,500 employees and operations encompassing around 15,000 slot machines, 500 table games and 5,300 hotel rooms.
So, maybe it’s not such a bad idea to wager $100 on BALY stock at its currently depressed price. Besides, there’s positive news to report. Specifically, Bally’s recently finalized a transaction with Gaming and Leisure Properties, a company that leases properties to gaming operators.
It’s a sale leaseback transaction relating to multiple properties, for total consideration of $635 million. As the press release states, “The transaction was structured as a tax-free capital contribution, and a substantial portion of the proceeds will be applied to reduce Bally’s debt.”
Read the Fiscal Fine Print Before Considering BALY Stock
The deal with Gaming and Leisure Properties sounds like a net positive for Bally’s. Don’t jump the gun with an investment, though, until you’ve delved into the company’s financials.
Let’s try out a side-by-side comparison. In 2022’s second quarter, Bally’s reported $552.5 million in revenue and net income of $59.5 million. Fast-forward to the third quarter of 2022, and Bally’s posted $578.2 million in revenue, a slight quarter-over-quarter improvement.
So far, so good. However, Bally’s Q3 2022 net income shrank to just $600,000. That’s paltry for a company of this size, and it might cause investors to wonder whether Bally’s will be unprofitable in the coming quarters.
What You Can Do Now
There are different approaches that prospective investors can take. They can sit tight and wait for further updates on Bally’s financials. That’s not a terrible idea, actually.
If you’re feeling adventurous, though, then you can just buy $100 worth of BALY stock. Just maybe, Bally’s will successfully pay off its debt and increase its quarterly net income. Then, your small gamble could possibly pay off in the long run.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.