Scientific Games Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of lottery-game designer Scientific Games (NAS: SGMS) hit the jackpot today, rising as much as 30% in intraday trading on heavier-than-average volume.

So what: Apparently, investors haven't forgotten how to buy stocks. Scientific Games helped remind investors that good things still do happen by reporting better-than-expected revenue and earnings for its second quarter. Excluding the racing business that it sold, Scientific Games' second-quarter sales rose 7.4% to $220.2 million. The bottom line pulled itself out of the red to register a $0.08-per-share profit. Wall Street analysts had been expecting $0.04 in earnings per share on $210.7 million in revenue.

Now what: The company's results were surprisingly solid -- particularly in the U.S. -- considering the still-sluggish state of the economy and consumer confidence. Of course, perhaps it just shows that, tough times or not, people are always looking for the easy out. Investors are obviously excited about the results announced today, but with a price-to-earnings ratio of 21 on analysts' 2013 earnings expectations, I think there are definitely better bargains out there right now.

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