AGS, NeoGames Could Lead Gaming Tech Q3 Earnings Beats

Posted on: November 3, 2021, 12:35h. 

Last updated on: November 3, 2021, 02:02h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Third-quarter earnings season is well underway, and analysts are forecasting impressive reports from gaming technology firms and device manufacturers.

Gaming Tech
Gaming tech equities are soaring as patrons return to casinos, as seen above. Analysts see third-quarter earnings beats coming. (Image: Wayne Parry/AP)

Everi Holdings (NYSE:EVRI) got that ball rolling today, reporting earnings per share of seven cents on sales of $168.3 million. Wall Street expected earnings of four cents on revenue of $161.46 million. The Las Vegas-based slot machine maker and fintech provider also forecast full year net income of $98 million to $100 million on sales of $645 million to $653 million.

Analysts also expect sturdy September quarter reports from PlayAGS (NYSE:AGS), iLottery provider NeoGames (NASDAQ:NGMS), and Scientific Games (NASDAQ:SGMS).

We are forecasting Q3 earnings beats for AGS, SGMS, EVRI (pre-released), & NGMS. Continued robust consumer trends, net of modest sequential impact from Delta variant and weather, should see upside to Street gaming ops estimates,” said Stifel analyst Jeffrey Stantial in a note to clients.

PlayAGS is slated to report results for the July through September period on Thursday. Scientific Games and NeoGames step into the earnings confessional on Nov. 9 and Nov. 11, respectively.

Momentum for Gaming Tech Equities

Enthusiasm for gaming tech shares is building, as investors look for other ways to play the gaming industry’s recovery beyond traditional casino operators. For example, shares of PlayAGS are up 18.65 percent over just the past week. The stock is higher by 5.7 percent today on volume that’s more than quadruple the daily average.

AGS derives the bulk of its revenue from regional and tribal casinos, and Wall Street widely expects the company to deliver a sixth consecutive earnings beat tomorrow. It’s expected AGS’ third-quarter installation base should increase about 300 units from the second quarter, while notching a win per unit increase of 20 percent from the July through September period in 2019.

“We believe sequential improvement in purchasing behavior likely reflects operator optimism amidst a continued healthy consumer (exemplified by ramping operator return of capital) coupled with a growing appreciation for the casino floor as the profit hub,” adds Stantial.

The analyst says management teams from gaming tech companies are likely to comment positively about fourth-quarter trends, but visibility beyond could be limited.

Loving Lottery

Stantial analysts also sees positive implications for lottery companies such as NeoGames and International Game Technology (NYSE:IGT).

“We think lottery will also be an underappreciated benefactor of ongoing strength in the consumer,” said the analyst.

He says overall US lottery ticket sales likely jumped eight percent in the third quarter from the same period in 2019, with instant ticket sales increasing four percent.

He boosts his September quarter revenue projection on NeoGames by approximately $1 million, while estimating an earnings before interest, taxes, depreciation and amortization (EBITDA) beat of two percent.