WMS Industries Earnings Preview

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WMS Industries (NYS: WMS) only managed to meet estimates last quarter, and investors hope that it will surpass expectations this time. The company will unveil its latest earnings on Thursday, Aug. 4. WMS Industries is engaged in serving the legalized gaming industry worldwide by designing, manufacturing, and distributing video and reel-spinning gaming machines, video lottery terminals, and in-gaming operations.

What analysts say:

  • Buy, sell, or hold?: Analysts are bullish on WMS Industries, as nine rate it as a buy and only one rates it as a sell. Analysts don't like WMS Industries as much as competitor Bally Technologies overall.
  • Revenue forecasts: On average, analysts predict $211 million in revenue this quarter. That would represent a decline of 1.1% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.53 per share. Estimates range from $0.48 to $0.56.

What our community says:
CAPS All-Stars are solidly backing the stock with 86.9% giving it an "outperform" rating. The community at large agrees with the All-Stars, with 83.2% granting it a rating of "outperform." Fools are keen on WMS Industries, though the message boards have been quiet lately, with only 73 posts in the past 30 days. WMS Industries' bearish CAPS rating of two out of five stars falls short of the Fool community's sentiment.

Management:
WMS Industries' income has fallen year over year by an average of 2%. A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases. The company's gross margin shrank by 3 percentage points in the last quarter. Revenue fell 2.4% while cost of sales rose 5.7% to $75.7 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ3Q2Q1Q4
Gross Margin60.7%60.6%61.8%63.8%
Operating Margin18.1%18.4%15.6%24.6%
Net Margin12.6%13.5%10.4%15.7%
One final thing: If you want to keep tabs on WMS Industries' movements, and for more analysis on the company, make sure you add it to your Watchlist.

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