London-based International Game Technology PLC (IGT) provides gaming technology products and services around the world. It operates in two segments: Global Lottery and Global Gaming. In comparison, Scientific Games Corporation (SGMS) develops technological products and services and related content for the international gaming, lottery, social and digital gaming industries. It operates in games; Lottery; SciPlay; and digital segments.
Gaming companies, especially those offering online services, have generated significant returns over the past year, with people increasingly turning to online gaming as brick and mortar casinos have been closed for more. COVID-19 lockdown reasons. With the increasing legalization of online gambling across the country, many businesses in this space are well positioned to benefit. According to ResearchandMarkets, the global gaming market is expected to grow at a CAGR of 7% over the next four years.
IGT has gained 19.6% in price over the past six months, while SGMS has returned 9%. Additionally, IGT’s 117.6% gains over the past year are significantly higher than SGMS’s 71.8% returns. Additionally, IGT is the clear winner with gains of 56.6% against SGMS’s 3.5% returns in terms of performance over the past three months.
But which of these two titles is the best buy now? Let us know.
On November 1, 2021, IGT announced that it had expanded its sports betting market opportunities in Puerto Rico through a multi-year PlaySports technology and services agreement with The Stadium LLC. Joe Asher, IGT President of Sports Betting, said, âThe prospect of adding Puerto Rico as a territory with sports betting powered by PlaySports is another exciting step in our efforts to further expand our footprint across the world. North America. “
On November 3, 2021, SGMS acquired Authentic Gaming, marking the company’s first step into the live casino market and significantly improving the company’s product portfolio. This acquisition marks another important milestone in SGMS ‘strategic plan as it continues to realize its vision of becoming the world’s leading cross-platform games company.
Recent financial results
IGT’s revenue increased 21% year-on-year to $ 984 million for its fiscal third quarter, ended September 30, 2021. The company’s adjusted EBITDA increased 42% year-on-year to $ 407 million dollars, while its adjusted net income was $ 101. million dollars versus a loss of $ 129 million in the previous year quarter.
SGMS revenue increased 25% year-on-year to $ 539 million for the fiscal third quarter ended September 30, 2021. The Company’s adjusted EBITDA from continuing operations increased 74% year-on-year to $ 203 million. By comparison, its adjusted net income was $ 100 million, down from a loss of $ 187 million in the previous year quarter.
Expected financial performance
Analysts expect IGT’s revenue to grow 84.3% for the quarter ending Dec.31, 2021 and 30.5% in its 2021 fiscal year. The company’s EPS is expected to increase by 329 , 2% for the quarter ending December 31, 2021 and 438.8% during the year. 2021. In addition, its EPS is expected to grow at a rate of 30.2% per year over the next five years.
SGMS revenue is expected to decrease by 26.6% for the quarter ending December 31, 2021 and by 13.3% in its fiscal year 2021. Its EPS is expected to increase by 113.7% for the quarter ending on December 31, 2021 and 157.6% in its 2021 fiscal year. However, the company’s EPS is expected to decline at a rate of 74.1% per annum over the next five years.
IGT’s last 12 months turnover is 1.27 times that of SGMS. IGT is also more profitable, with EBIT and EBITDA margins of 20.65% and 33.69%, respectively, against respectively 15.53% and 28.60% for SGMS.
In addition, IGT’s ROA and ROTC of 4.16% and 5.31%, respectively, are higher than SGMS’s 3.75% and 4.37%.
In terms of forward EV / S, SGMS is currently trading at 6.26x, which is 99.4% higher than IGT’s 3.14x. Additionally, SGMS ‘forward EV / EBITDA ratio of 16.05x is 105.5% higher than IGT’s 7.81x.
So, IGT is relatively affordable here.
IGT has an overall A rating which equates to a strong buy in our property POWR odds system. In comparison, SGMS has an overall C rating, which translates to Neutral. POWR scores are calculated taking into account 118 separate factors, each factor being weighted to an optimal degree.
IGT has a B rating for Sentiment, in line with analysts’ expectations that its revenue will increase in the coming months. In contrast, SGMS has a D rating for Sentiment, which is in line with analysts’ expectations that its revenue will decline in the near term.
Of the 31 actions of Entertainment – Casinos / Gambling industry, IGT is ranked No. 3. In contrast, SGMS is ranked No. 12.
Beyond what I stated above, we also rated stocks for momentum, value, stability, quality, and sentiment. Click here to view all IGT reviews. Also get all SGMS assessments here.
With technological advancements and increasing legalization, the gambling market is expected to grow in the coming months. While IGT and SGMS are expected to win, it is better to bet on IGT due to its higher profit margin, better growth prospects and lower valuation.
Our research shows that the chances of success increase when investing in stocks with an overall strong buy or buy rating. See all other top rated stocks in Entertainment – Casinos / Gambling here.
IGT stock was trading at $ 28.22 per share on Monday afternoon, up $ 0.65 (+ 2.36%). Year-to-date, IGT has gained 66.59%, compared to a 27.27% increase in the benchmark S&P 500 during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s a passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach he takes while advising investors in his articles. Following…
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