Scientific Games Hits 52-Week High: What's Driving The Stock?

Shares of Scientific Games Corporation (NASDAQ:SGMS) crafted a fresh 52-week high of $26.70 during yesterday’s trading session, before closing a tad lower at $26.60. The stock has added 89.6% on a year-to-date basis.

Also, Scientific Games shares have vastly outperformed the Zacks Computer-Services industry in the last one year. While the stock returned an impressive 180.4%, the industry gained only 15.1%.

Scientific Games provides instant ticket and online lottery products as well as systems and services to lottery authorities and gaming markets worldwide.

Scientific Games is well positioned to benefit from its innovative product pipeline. The firm recently launched its first skill-based slot machine, which is based on the popular classic arcade video game, and will appear on the Blade s32 cabinet. Last year, the company received initial jurisdictional approvals for its GameScape cabinet, which is a positive. The company also unveiled its Twinstar cabinet last year, which seems to have been received well by the market. The novel cabinet is so designed that it works on the company’s ArgOS operating system in order to support both Bally and WMS brands’ content.

Moreover, strategic acquisitions have been a key part of Scientific Games’ growth story over the years. Acquisitions such as Bally Technologies, WMS Industries (2013), Parspro and Provoloto (2012), Barcrest Group Limited (2011), Sceptre Leisure Solutions (2010) and GameLogic (2010) have expanded the company’s ability to offer computerized systems and services to the global gaming industry. The company’s management is looking to further pursue possible new acquisitions in the near term, which will boost top-line growth, going forward.

Scientific Games acquired Spicerack Media, Inc in Apr 2017. Spicerack is the creator of the successful Bingo Showdown social bingo mobile game app. Spicerack has complemented the company’s stable of social casino games and mobile offerings.

The company reported first-quarter 2017 loss of 92 cents per share, wider than the Zacks Consensus Estimate of a loss of 74 cents. However, the revenues increased 6.4% from the year-ago quarter to $725.4 million, which was better than the Zacks Consensus Estimate of $711.5 million. Operating income increased 75% from a year ago to $88.0 million as a result of the revenue growth and lower cost structure.

Scientific Games currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the broader tech space include TiVo Corp (NASDAQ:TIVO) , MercadoLibre (NASDAQ:MELI) and Ollie's Bargain Outlet Holdings (NASDAQ:OLLI) . While TiVo Corp and MercadoLibre sport a Zacks Rank #1 (Strong Buy), Ollie's Bargain Outlet carries a Zacks Rank #2 (Buy).

In the trailing four quarters, TiVo, MercadoLibre and Ollie's Bargain Outlet delivered average positive earnings surprises of 67.56%, 26.74% and 14.56%, respectively.

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