The stock of Scientific Games Corp. (SGMS, Financial) has been on a roll for the last month.
Just before the end of September, the stock grew by 9.5% to end the day at $42.05 with the momentum expected to continue in the coming months. The stock also came agonizingly close to its $42 high. The recent performance on the stock market has not been a fluke by any means. Scientific Games has strategically expanded its product portfolio including a reincorporation plan from Nevada to Delaware. Year to date the company stock has grown 200.4% which is way above the average industry rally standing at 13.7%.
Key growth factors
The success of Scientific Games in the gaming market and in the stock market can be attributed to a number of key factors. The company already enjoys a high-end position in the gaming equipment sector due to its array of innovative and state-of-the-art products. Its market share in the interactive and gaming sector has grown immensely. This sector has also contributed much of the revenue generated by the company.
In the results released for the last quarter, Scientific Games reported that 60% of its total revenue was drawn from the gaming and interactive segment. Sales in gaming machines, gaming systems and its table products were robust for the last quarter. Shipment of the new Iview4 display units has also been a key driver of growth for Scientific Games.
The Iview4 product is backed by sophisticated technology and advanced features. The rate of its adoption since its launch has been encouraging. Scientific Games recently also closed a deal to provide 4,200 Iview4 products for the Temecula Pechanga Resort and Casino in California. The company was also selected by Westgate Las Vegas Resort and Casino to provide a wide range of products for the management of the casino and additional support for the online casinos elite and mobile gaming platforms.
Scientific Games is confident that its gaming segment will continue to grow resiliently in the coming months. The company has also confirmed the launch of a brand-new slot game called "Anchorman: The Legend of Ron Burgundy." The game was launched last month and is the first of a planned pipeline of slot games that the corporation will release in the near future. Some of the other slot games on the horizon include "Seinfeld" and unique James Bond-themed games.
Outlook
The Zacks Consensus Estimate has rated Scientific Games a 3, which means it’s a good time to hold on to its shares. The Consensus has also narrowed loss estimates for the third quarter in 2017 from 43 cents to 35 cents. Fiscal estimates for the year are also looking better than earlier anticipated with estimates narrowing the potential loss from $2.47 to $2.21. Scientific Games is definitely a company that’s looking to the future, and its recent success in the stock market and in the gaming world is an indication that things are starting to look up.
Disclosure: I do not own any shares of any stocks mentioned in this article.
