Scientific Games Shares Dropped: 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-solution provider Scientific Games (NAS: SGMS) fell 15% after the company reported fourth-quarter earnings.

So what: Revenue grew 13% in the quarter, to $239.1 million, topping estimates by a small margin. But earnings per share excluding special items were just $0.07, and analysts had expected $0.10 in earnings.

Now what: The company's operations are improving, just not as fast as investors would like. The company still lost $8.5 million before adjustments, and until it can swing to a consistent profit I'm not jumping on this one. Growth just isn't strong enough and I don't see the company as having a strong enough competitive advantage to demand a premium without demonstrating it can make a profit.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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