According to Reuters IGT is working with Morgan Stanley to explore a sale after attracting interest from other video game companies and some private equity firms. Scientific Games reportedly received sympathy bids following the news according to Seeking Alpha.
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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 some concerns, 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 unimpressive growth in net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 242.1% when compared to the same quarter one year ago, falling from -$13.15 million to -$45.00 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
- The debt-to-equity ratio is very high at 11.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SGMS's quick ratio is somewhat strong at 1.45, demonstrating the ability to handle short-term liquidity needs.
- The share price of SCIENTIFIC GAMES CORP has not done very well: it is down 24.12% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- SCIENTIFIC GAMES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SCIENTIFIC GAMES CORP continued to lose money by earning -$0.31 versus -$0.50 in the prior year. For the next year, the market is expecting a contraction of 220.3% in earnings (-$0.99 versus -$0.31).
- You can view the full analysis from the report here: SGMS Ratings Report