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Bear of the Day: Light & Wonder (LNW)

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Light & Wonder (LNW - Free Report) is a Zacks Rank #5 (Strong Sell) and recently missed earnings.  Despite the recent earnings miss, has continued higher.  Most times, when a company misses earnings the stock will trade lower, so this is a very interesting case.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


Light & Wonder Inc. is a cross-platform games and entertainment company. Its OpenGaming(TM) platform powers digital-gaming network in the industry. Light & Wonder Inc., formerly known as Scientific Games Corporation, is based in Las Vegas NV.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of LNW, I three misses of the  Zacks Consensus Estimate and one beat.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For LNW I see annual estimates moving lower.

The current fiscal year consensus number moved lower from a loss of $1.49 to a loss of $1.83 over the last 60 days.

The next year has moved from $2.22 to $1.70.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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