Shares of Multimedia Games Holding Company, Inc. (MGAM - Snapshot Report) are rising on the back of impressive second-quarter results, announced May 3, 2012. This casino-based gaming solutions provider has a Zacks #1 Rank (Strong Buy).
Currently, the stock is trading around its 52-week high. There is also a potential for further upside based on Multimedias solid growth projection for fiscal 2012.
Q2 Results Crush Estimates
Multimedia Games reported fiscal second quarter 2012 earnings per share of 24 cents, beating the Zacks Consensus Estimate by a massive 166.67%. Net sales jumped 31.2% over last year to $39.5 million, topping the Zacks Consensus Estimate of $36.0 million.
The companys largest segment (Gaming Operations) grew 24.0% year over year, backed by success in the domestic markets and an increase in the average installed base. Revenue for the gaming equipment and system sales segment increased 57.4% while Other revenue grew 36.4% year over year.
Gross margin improved 270 bps from the year-ago quarter to 83.9%. The operating margin increased significantly to 16.9% from 4.5%. Higher selling, general and administrative expenses were offset by reduced amortization and depreciation expenses.
Multimedia Games expects fiscal 2012 total revenue in the range of $144 million to $147 million, up from $127.9 million recorded in fiscal 2011. Expectations for growth in new unit sales led the company to raise its fiscal 2012 earnings guidance. Multimedia now expects diluted EPS between 72 cents and 76 cents, compared with its previously expected range of 42 cents to 45 cents.
Following the earnings release, the Zacks Consensus Estimate for the fiscal third quarter increased 80.0% to 18 cents, while the estimate for fiscal 2012 shot up 65.2% to 76 cents.
Valuation Looks Attractive
Shares of Multimedia Games were up 88.0% in the past 6 months, compared with a 3.5% decrease for the S&P 500.
The company is expected to grow 25.0% over the next 5 years, compared to a 17.8% growth rate for the industry. However, the PEG of 0.8 is comparable to the 0.7 for the industry, indicating upside potential.
Multimedia Games has traded at a premium to rivals Bally Technologies Inc. (BYI), International Game Technology (IGT), Video Gaming Technologies, Inc. and WMS Industries Inc. (WMS).
The significant increase in the stock price in recent months was on account of the encouraging sales trend and continued development of new games. The stock is currently above its 50 and 200-day moving averages of 13.53 and 11.23, respectively.
Trading volumes are considerably lower than its peers.
Founded in 1991, Texas-based Multimedia Games Holding Co. is one of the most renowned providers of gaming machines, video lottery terminals, and associated systems and equipment. Multimedia provides Native American tribes and international lottery markets with casino gaming technology.
This Week's Momentum Zacks Rank Buy Stocks
CoreLogic Inc. (CLGX) shares touched their 52-week high on July 10, 2012 after raising its full-year outlook late last month. This provider of information, analytics and business services has also put together four consecutive quarters of positive earnings surprises with an average beat of practically 24%. CLGX is a Zacks #1 Rank (Strong Buy). Read the full article.
UniFirst Corporation (UNF) posted impressive fiscal third-quarter 2012 results, which helped shares of this uniforms supplier to a 52-week high of $67.51 on July 9, before closing at $67.05. Overall, this Zacks #1 Rank (Strong Buy) company has been on an upsurge since October 4, 2011, gaining a solid 53% with the strength of consistent earnings beats over the last four years. Read the full article.
Shares of Stage Stores Inc. (SSI) have climbed by more than 22% since May 1 on stellar fiscal first-quarter 2012 results and solid same-store sales increases of 8% in May and 3.3% in June. This department and off-price store retailer is a Zacks #1 Rank (Strong Buy) and is presently trading near its 52-week high. Read the full article.
Conceptus (CPTS) delivered a positive first-quarter earnings surprise of 30.8% on April 26, but shares of this birth control company have been on an upswing since January. Owing to an uptrend in earnings estimates, stemming from an improved guidance, this company carries a Zacks #2 Rank (Buy). Read the full article.