Why Multimedia Games Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, machine gaming company Multimedia Games Holding Company (NASDAQ: MGAM  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Multimedia Games, and see what CAPS investors are saying about the stock right now.

Multimedia Games facts

 

 

Headquarters (founded)

Austin, Texas (1991)

Market Cap

$750.5 million

Industry

Casinos and gaming

Trailing-12-Month Revenue

$172.7 million

Management

CEO/COO Patrick Ramsey

CFO Adam Chibib

Return on Equity (average, past 3 years)

15.7%

Cash/Debt

$81.5 million / $31.5 million

Competitors

Bally Technologies

International Game Technology

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 86% of the 90 members who have rated Multimedia Games believe the stock will outperform the S&P 500 going forward.

Earlier this week, one of those Fools, TMFInnovator, explained why the stock still has plenty of room to run:

Wall Street just can't figure this one out.

-MGAM soars 19% in April after crushing estimates once again ($0.31 reported vs $0.19 estimate). But this is nothing new. MGAM has beaten estimates by AT LEAST 38% in each of the past four quarters.

-Current estimates are still below company expectations ($0.83 2013 EPS analyst estimates, vs $1 company expectations). If $1/share does indeed happen in 2013, the stock is still pricey at $26 today. But earnings doubled in '11 and then quadrupled in '12, so the valuation isn't exactly unreasonable.

-The economy is improving, and the gaming industry should benefit from additional consumer discretionary income.

Though perhaps not a "buy and forget about it" company, I'm willing to make the bet that they outperform in the short-term.  

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong five-star rating, Multimedia Games may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.


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