Scientific Games Corp (NASDAQ:SGMS) Builds Upside Momentum


Corrections have been few in the recent run-up seen in Scientific Games Corp (NASDAQ:SGMS), with the stock jumping 57% since August 31.

Scientific Games is a developer of content, hardware and services for the gaming, lottery and interactive markets.

Its shares closed 6.24% higher on Monday, closing at $12.94, with traded volume of 1.70 million.

Did Scientific Games Corp (NASDAQ:SGMS) turn around on September 7?

The stock shot up 16.72% on September 7 after the company announced that it had designated the Company’s wholly owned interactive social gaming subsidiaries, including Dragonplay Ltd. and Phantom EFX, LLC, as unrestricted subsidiaries under its debt agreements.

“The Company’s social gaming business has generated sequential double-digit growth in each of the most recent three quarters and a 68-percent increase in revenue year-over-year for the most recent quarter (second quarter ended June 30, 2016),” the company explained.

Following unrestricted designation, the social gaming entities will remain wholly owned by Scientific Games, but will be free to maximize growth in their operating areas.

It is interesting to note that the Scientific Games stock has not looked back after the said announcement.

Scientific Games Corp (NASDAQ:SGMS) gets a boost from acquisition

On October 5 the stock received another boost on the announcement of the acquisition of the interactive games portfolio of Karma Gaming.

Though the purchase was in fact effected in June, and no price was mentioned, Jim Kennedy, Executive Vice President and Group Chief Executive of Lottery at Scientific Games, said that the transaction would help expand its interactive business, as well as provide unique solutions to lottery customers such as state lotteries. “When the biggest lotteries in the U.S. look for interactive content, they look to Scientific Games,” he said.

Quarterly results from Scientific Games Corp (NASDAQ:SGMS)

The company reported Q2 numbers on August 5. EPS was $-0.59, which beat by $0.22 and revenue $729.2 million which beat by $20.36 million and was up 5.5% year on year.

The company said on the earnings call that it generated three consecutive quarters of year-over-year growth in revenue, operating profit, AEBITDA, and free cash flow.

During Q2 it already reduced its debt by $80 million.

Net loss has reduced from $678.20 million in the quarter ended September 30, 2015 to just $51.70 million in the quarter ended June 30, 2016.

The company is scheduled to report Q3 numbers on November 7, 2016.


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