NEW YORK (TheStreet) -- Shares of Scientific Games (SGMS) - Get Scientific Games Corporation Report were falling 8.8% to $9.04 Monday following reports that several banks have put off syndicating $3.19 billion of loans for the slot-machine maker.
JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report , Bank of America (BAC) - Get Bank of America Corp Report , and Deutsche Bank (DB) - Get Deutsche Bank AG Report have put off syndicating the loan that would have helped Scientific Games acquire Bally Technologies (BYI) , according to Bloomberg. The banks reportedly weren't able to get enough interest from investors by an Oct. 3 deadline for the bridge loan.
The banks already marketed about $2 billion in separate loans that will help finance the $5.1 billion acquisition.
Shares of Bally Technologies were falling 2.5% following the report.
TheStreet Ratings team rates SCIENTIFIC GAMES CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCIENTIFIC GAMES CORP (SGMS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 458.0% when compared to the same quarter one year ago, falling from -$12.98 million to -$72.40 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, SCIENTIFIC GAMES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Although SGMS's debt-to-equity ratio of 14.27 is very high, it is currently less than that of the industry average. Even though the debt-to-equity ratio is weak, SGMS's quick ratio is somewhat strong at 1.41, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $23.80 million or 49.14% when compared to the same quarter last year. Despite a decrease in cash flow SCIENTIFIC GAMES CORP is still fairing well by exceeding its industry average cash flow growth rate of -67.46%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.91%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 514.28% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: SGMS Ratings Report