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Why is it Wise to Hold Scientific Games (SGMS) Stock Now?

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Shares of Scientific Games Corporation (SGMS - Free Report) surged 9.5% to close at $42.05 on Sep 18. Shares also touched a 52-week high of $42.10 during yesterday’s trading session.

The share price momentum can be attributed to the company’s strategic initiatives andexpanding product portfolio.

Moreover, the recent announcement of the company’s proposed reincorporation from Delaware to Nevada where it is currently doing business is a positive in our view. Local incorporation has many advantages like lower cost, familiarity with local law and geographical proximity.

Notably, Scientific Games’ shares have gained 200.4% year to date, substantially outperforming the industry’s13.7% rally.

Key Factors

Scientific Games with its innovative product pipeline enjoys a premium position in the gaming equipment space, as well as in the instant ticket and online lottery markets.The company’s growth is driven by increases in gaming and interactive segment revenues.

Notably, in the last reported quarter, almost 60% of Scientific Games’ total revenue was contributed by its gaming segment, which was driven by growth in Gaming Machine sales, Gaming Systemsand Table Products. The year-over-year growth in Gaming Systems revenues was driven by an increase in software and hardware sales, including shipment of new iVIEW4 player-interface display units.

The company’s iVIEW4 technology, backed by sophisticated and advanced features, is witnessing strong adoption. Earlier this month, the company was awarded a contract by Temecula, CA-based Pechanga Resort & Casino to provide 4,200 new iVIEW4 on-device player-interface controllers.

The company also announced that itis has been chosen by Westgate Las Vegas Resort & Casino for providing a suite of products for casino management as well as for its online and mobile platforms.

Further, the company’s Gamescape, Pro Wave, and TwinStar cabinets along with J43 and three-reel mechanical cabinets have also been instrumental in boosting its gaming segment.

Additionally, Scientific Games announced the launch of its new slot game named Anchorman: The Legend of Ron Burgundy last month. The company’s future pipeline of slot games includes Seinfeld and James Bond themed games.

Estimate Revisions

The Zacks Consensus Estimate for third-quarter 2017 has narrowed from a loss of 43 cents to a loss of 35 cents over the last 60 days. Also, for fiscal 2017, estimates have narrowed from a loss of $2.47 to a loss of $2.21 over the same time frame.

Zacks Rank & Key Picks

Scientific Games carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Activision Blizzard (ATVI - Free Report) , Lam Research (LRCX - Free Report) and Micron Technology (MU - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Activision Blizzard, Lam Research and Micron is currently projected to be 13.6%, 17.2% and 10%, respectively.

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