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Momentum

Multimedia Games Co. (MGAM - Snapshot Report) has been red hot since early October, recently hitting a new multi-year high after reporting another strong quarter that included a huge earnings surprise. With estimates on the rise and a bullish growth projection, this Zacks #1 Rank stock is a lucky number 7 for momentum.

Company Description

Multimedia Games Holding Co, together with its subsidiaries, engages in the design, manufacture, distribution and maintenance of gaming machines and lottery terminals. The company was founded in 1991 and has a market cap of $204 million.

MGAM has been rallying hard since early October, fueled by strong Q3 results from mid November that came in well ahead of expectations.

Third-Quarter Results

Revenue for the period was up 17% from last year to $36 million. Earnings also came in strong at 11 cents, blowing past the Zacks Consensus Estimate of 2 cents.

Gaming operations, the company's largest segment, saw sales increase 10% from last year to $25.5 million. Gaming equipment and system sales saw the biggest gain, with sales up 41% from last year to $10 million.

Financial Profile

The company has used its earnings momentum to strengthen its financial profile, with cash and short-term investments more than doubling from last year to $47 million while total debt 18% to $37 million.

Estimates

We saw some bullish movement in estimates off the good quarter, with the current year adding 6 cents to 25 cents. The next-year estimate is pegged at 31 cents, a solid 23% growth projection.

Valuation

With a PEG ratio of 1.26, MGAM trades at a premium to the benchmark of 1 for value.

12-Month Chart

On the chart, shares have seen big gains over the last few months, recently hitting a new multi-year high on the good quarter. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.

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