How High Can Bally Technologies Fly?

Shares of Bally Technologies (NYSE: BYI  ) hit a 52-week high recently. Let's look at how it got here and whether clear skies are ahead.

How it got here
Results have been improving at Bally because of expanded gaming in nearly every market around the world. Domestically, gaming has expanded into new locations and recent years have seen a rapid expansion of gaming in Asia. In the most recent quarter, higher selling prices of products in international markets were one of the main drivers of strong revenue and profit.

This expansion in gaming has helped Bally but hasn't translated to stronger results for all gaming equipment makers. International Game Technology (NYSE: IGT  ) , Shuffle Master (Nasdaq: SHFL  ) , and WMS Industries (NYSE: WMS  ) have had more of a rocky road, not only during the recession, but after it as well.

BYI Earnings Per Share TTM Chart

BYI Earnings Per Share TTM data by YCharts

Compared to its slot-making competitors, Bally is performing like a dream. IGT and WMS have both seen revenue fall in the most recent quarter, and that's why Bally is touching a 52-week high and they aren't.

Company

Quarterly Revenue Growth

Profit Margin

Forward P/E Ratio

Bally Technologies 15.2% 11.6% 15.6
International Game Technology (1.3%) 13.3% 13.6
Shuffle Master 27.9% 14.4% 19.0
WMS Industries (18.9%) 7.6% 14.5

Source: Yahoo! Finance.

Shuffle Master tops Bally's growth, but that's partly due to a trend toward table games in Asia and high shuffler demand.

What's next?
Bally has been firing on all cylinders recently, but the expansion in gaming is slowly coming to a halt. Macau won't open a new casino until at least 2015, Singapore isn't expanding, and U.S. operators aren't having a great deal of success so expansion should slow here. Outside of Las Vegas Sands' (NYSE: LVS  ) possible expansion into Spain, Japan, or Vietnam, I don't see a huge upside from here.

The CAPS community has given Bally a one-star rating, and I have to agree that the run may be over. There aren't a lot of catalysts that will drive the stock in the next year or two, and competition could heat up from underperforming slot competitors.

Interested in reading more about Bally Technologies? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

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.

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