Bally's Stock is Set Up for High Risk, High Reward Traders

BALY is trading down over 54% in the past year

May 26, 2022 at 9:51 AM

BALY

Bally's Corp (NYSE: BALY) is a global casino-entertainment company with a presence in Online Sports Betting and iGaming. In early May, BALY announced that Bally's Chicago, its $1.7 billion destination casino, entertainment, and hotel project, was selected by the City of Chicago as the preferred bidder in the city's request for proposal process to construct and operate a casino resort in downtown Chicago.

Bally’s stock has lost 33% in 2022, and 54% in the last 12 months. The equity has seen a slight rise off its May 10, annual low of $21.25, though a former floor near the $26 level has kept a stiff lid on the shares, while the 20-day moving average looms ahead as potential resistance as well.

BALY may 26

This negative price action has attracted short sellers, with short interest surging 41.5% in the last two reporting periods. The 3.02 million shares sold short now make up 9.3% of the stock's available float, or over a week's worth of pent-up buying power.

The casino stock now offers a low valuation at a price-sales ratio of 0.83, following its bearish form this past year and a surge in the company's revenue growth. Bally’s reported 254.7% revenue growth for fiscal 2021 and has already increased its trailing 12-month revenues by 26.9% since fiscal 2021. BALY is also estimated to end fiscal 2022 with 80.7% revenue growth, making the stock a strong option for growth investors to diversify their portfolios. In addition, the casino company is estimated report a positive earnings per share (EPS) of $1.00 for fiscal 2022. On top of that, Bally’s is estimated to grow revenues by 10.3% and earnings by 55% for fiscal 2023.

BALY, however, comes with a high level of risk due to its awful balance sheet. The company currently has $4 billion in total debt, which is about triple the casino stock's market cap of $1.31 billion. BALY also holds just $165.77 million in cash on its balance sheet, limiting potential expansion opportunities. Still, the reward potential remains high for Bally's stock due the business’ high sales growth rate and the expected shift into profitability, making it an intriguing short-term play, despite the company’s flawed fundamentals.

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