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Scientific Games (SGMS) Down 2.4% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Scientific Games . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Scientific Games due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Scientific Games Q4 Earnings Beat, Revenues Rise Y/Y

Scientific Games reported fourth-quarter 2021 earnings (from continuing operations) of 58 cents per share, which beat the Zacks Consensus Estimate by 261.1%. The company had reported a loss of $1.57 per share in the year-ago quarter.

Fourth-quarter total revenues were $580 million, up 20.8% year over year, driven by strong growth in the Gaming business. The top line beat the consensus estimate by 3.3%. Services revenues surged 25% year over year to $425 million. Product sales grew 10.7% to $155 million.

In 2021, revenues increased 26.7% year over year to $2,153 million, benefiting from solid growth across all businesses. Gaming performance was primarily driven by North America Premium Gaming Operations and the market recovery.

Quarter in Detail

Gaming revenues (64.1% of total revenues) surged 30.1% year over year to $372 million, driven by growth in Gaming operations due to an increase in premium installed base and growth in Game Sales and Table Games business.

SciPlay revenues (26.6% of revenues) grew 4.8% year over year to $154 million. The performance was driven by strong monetization metrics with the fifth consecutive record quarter at Gold Fish Casino as well as strong growth at Quick Hit and Jackpot Party.

iGaming (9.3% of revenues) revenues increased 14.9% year over year to $54 million. The performance was driven by the strength of its original content, with new U.S. states coming online.

Consolidated adjusted EBITDA (AEBITDA) surged 67.4% year over year to $216 million. AEBITDA margin was 37%, significantly higher than 27% reported in the year-ago quarter. Gaming AEBITDA was $186 million, up 80.6%. SciPlay AEBITDA grew 6.6% to $48 million. iGaming AEBITDA was up 25% from the year-ago quarter to $15 million.

Total operating expenses increased 17.8% year over year to $577 million.

Notable Development

On Mar 1, 2022, the company announced its intention to rebrand Scientific Games Corporation to Light & Wonder, as part of the Lottery sale and to align with its vision of becoming the leading cross-platform global game company.

Its legal name “Scientific Games Corporation” is expected to be changed to “Light & Wonder, Inc.” during the second quarter of 2022, upon satisfying all requirements in Nevada.

As part of this transformation, the company’s new website featuring iGaming and land-based casino products, technology and services will now be

Cash Flow & Liquidity

In 2021, the company generated $304 million of cash from operating activities compared with $33 million in 2020. As of Dec 31, 2021, it had $585 million in cash and cash equivalents with $8,646 million of long-term debt. Net debt leverage ratio was 6.2 times at the end of the year.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 11.71% due to these changes.

VGM Scores

Currently, Scientific Games has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Scientific Games has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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