Scientific Games Shares Plunged: 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: Scientific Games (Nasdaq: SGMS  ) shares dropped 10% after the company announced earnings.

So what: The lottery was unkind as the company lost contracts and customers traded down to lower-margin products. Revenue fell 7.6% to $221.1 million, but net income tumbled 56% to $6.6 million or $0.07 per share.

Now what: Scientific Games has a history of underperforming expectations, and this quarter was no different. I don't see a reason to buy the shares given the loss of contracts, low margins, and history of underperformance. You could try to scratch off a few more shares, but don't be surprised if the results are just as disappointing as the last year for this stock.

Interested in more info on Scientific Games? Add it to your watchlist by clicking here.

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. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1350868, ~/Articles/ArticleHandler.aspx, 8/20/2014 8:50:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement