Why Scientific Games Shares Popped
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) saw shares surge 12% higher today after announcing first-quarter earnings.
So what: The company actually missed earnings per share of $0.06 when it reported earnings per share of just $0.03. Revenue rose 19% to $234.6 million and came in just slightly ahead of estimates.
Now what: Management pointed to strong retail sales growth in lotteries as the largest driver for the increase in revenue, but I'm still a little concerned about the bottom line. The company has now missed bottom-line estimates in three straight quarters and has posted a loss over the last year. I'm selling this pop and sitting out until profits improve in a meaningful way.
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At the time this article 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.