SciPlay Corp recently released its Q3 results that revealed they had fallen short of their estimated earnings, ending at $0.23 per share for the quarter as compared to the estimate of $0.28 per share, a surprise of -17.86%. Although this quarter has fallen short of expectations, the year-over-year increase is something to be excited about, as the earnings per share were sitting at $0.09. Coming off a positive Q2 in which they beat the estimate by 3.85%, producing an earnings per share of $0.27 compared to the estimate of $0.26, many thought SciPlay would achieve a similar figure or at least be closer to the estimate than what was achieved.
SciPlay Corp operating under the parent company Scientific Games , went public in May of 2019 and its stock has since had its ups and downs, ranging from just under $6 to reaching as high as above $18 over the course of the last 12 months. SciPlay in itself is a developer and publisher of digital games for mobile and web platforms specializing in social and casual casino games.
Reasons for optimism
Although this latest quarter was down in terms of earnings per share (EPS), there are still reasons to be optimistic about them going forward and why it would be a good decision to hold or potentially buy the stock.
Even with missing the EPS estimate for the quarter, SciPlay was still able to post revenues of US$151.20 million, beating the estimate by 2.41% and increasing substantially from the US$116.40 million in revenues posted a year ago. It will be interesting to see how 2020 finishes for them, with current estimates for the final quarter are sitting at US$0.25 per share and US$138.30 million in revenues.
Following these latest results, analysts have increased SciPlay’s estimates for 2021 from US$580.30 million in revenues and US$0.98 per share to US$586.60 million and US$1.02 in revenues and EPS respectively. This is an encouraging sign for an organization that continues to see a consistent rise in its revenue numbers and is now expecting their EPS to go along with it over the next 12 months. The estimated revenue increase isn’t drastic by any means but it remains on line with the annual revenue growth over the past year, as well as the industry forecast growth. SciPlay expects its revenue to grow along with the industry, which at this current rate should be strong for years to come.
This also continues to bode well for SciPlay against its competitors, in both the gaming and overall entertainment industries. Already bringing in revenues greater than a large number of competitors, it seems as if this trend will continue as SciPlay continues trending along with the industry.
What to keep an eye on
As SciPlay’s revenues seem to be on a steady path to success, there are differing views on what the stock price estimate. The consensus price target is the average of individual analysts targets, which sits at US$18.58 for SciPlay Corp , with a range valuing as high as US$23.00 and as low as US$12.50. While the stock is currently trading closer to the more bearish value, it does not automatically mean that it will reach the consensus price target, as we have seen so far throughout the past 12 months the volatility of the stock.
Based on where the stock is sitting at for SciPlay Corp , and the fact it has been fairly steady over the last few months as opposed to the previous volatile few months, now would seem like a decent time to buy in. As their revenues continue to grow along with the industry and popularity of their games, their EPS should see a steady rise in the future as well. There is also not too much of a risk in holding out and waiting to see how the final quarter of 2020 plays out or even Q1 of 2021, but if they can beat the revenue estimates again and remain in close proximity to the EPS estimates, there could be a further rise in share price inching closer to that of the consensus target.