Why Shares of Scientific Games Corp Soared
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 Corp were charging higher today, gaining as much as 24%, and finishing up 16% after reporting fourth-quarter earnings.
So what: The lottery-and-gaming company said revenue jumped 63%, to $401.9 million, easily beating estimates of $388 million. The strong revenue growth was mainly due to its acquisition of WMS Industries, which closed last October. Adjusted earnings per share of $0.03 missed estimates of $0.07, but investors seemed more enthused about the benefits of the acquisition. CEO David Kennedy also said that organic growth from its lottery business was "solid," adding to the gains from WMS.
Now what: Scientific Games also said efforts to integrate the acquisition remain on track, and that it expects to see $100 million in annual cost savings by the end of 2015. The company did not provide guidance, but those savings would have a serious impact on the bottom line as the gaming specialist reported operating loss of $18 million in 2013 on just more than $1 billion. As long as the integration goes according to plan, investors in Scientific Games should have significant profits to look forward to this year and next.
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The article Why Shares of Scientific Games Corp Soared originally appeared on Fool.com.
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