On Jun 25, 2013, Zacks Investment Research downgraded
Scientific Games (
to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
The downgrade primarily reflects Scientific Games' weak results
in the first quarter of 2013. The company failed to beat the
Zacks Consensus Estimate in the trailing four quarters and its
average surprise was (453.6%).
In the first quarter of 2013, Scientific Games reported a loss of
15 cents per share in contrast to the Zacks Consensus Estimate of
a profit of 2 cents, primarily due to lower revenue growth and
Revenues decreased 5.0% year over year and 11.9% sequentially to
$219.6 million, which missed the Zacks Consensus Estimate of
$228.0 million. The top-line decline was primarily due to lower
sales of lottery systems and terminals and lower-than-expected
instant ticket revenues.
Higher expenses (increased 660 basis points as percentage of
revenues) dragged down profit in the quarter. Operating margin
was 5.1% compared with 10.8% in the year-ago quarter.
The Zacks Consensus Estimate for the second quarter of 2013 has
declined 60.0% (3 cents) to 2 cents over the last 60 days.
The Zacks Consensus Estimate for 2013 decreased 78.3% (18 cents)
to 5 cents per share over the last 60 days. The Zacks Consensus
Estimate for 2014 dropped 22.2% (8 cents) to 36 cents per share
over the same period.
Other Stocks to Consider
Not all gaming and lottery systems providers are performing as
poorly as Scientific Games. We recommend
International Game Technology (
, which has a Zacks Rank #1 (Strong Buy).
Bally Technologies (
Boyd Gaming Corp (
, both with a Zacks Rank #2 (Buy), are also looking good at
BOYD GAMING CP (BYD): Free Stock Analysis
BALLY TECH INC (BYI): Free Stock Analysis
INTL GAME TECH (IGT): Free Stock Analysis
SCIENTIFIC GAME (SGMS): Free Stock Analysis
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