Why Scientific Games' Investors Won the Lottery
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 Scientific Games jumped 10% in late trading today after signing an important customer.
So what: The company announced that it has signed a contract extension to provide lottery gaming and instant ticket services for the Oklahoma Lottery. This was actually disclosed earlier this year, but investors bid up shares leading up to the announcement and nearly five times the three-month average volume of shares traded hands today.
Now what: This is definitely not a game changer for Scientific Games, and I'd still be worried about the company's continued losses and vast underperformance of expectations. Revenue and income from operations were both down in the first quarter of 2013, and this contract won't add to either going forward. I just don't see a reason to buy the stock today and won't consider buying until the company can prove it can make a long-term profit while growing revenue.
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The article Why Scientific Games' Investors Won the Lottery originally appeared on Fool.com.Fool contributor Travis Hoium and The Motley Fool have no position in any stocks mentioned. 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.