This Big Move Could Power Bally Earnings Higher

Bally Technologies (NYSE: BYI  ) will release its quarterly report tomorrow, and investors have already sent the stock into the stratosphere in recent months. Even though the casino-equipment industry has struggled from the relative weakness in the U.S. gaming market, most expect Bally earnings to post substantial growth, and a key buyout of a competitor's business could really boost Bally's future prospects even higher.

Bally Technologies is one of the companies behind the slot machines and other gaming devices you'll see at modern casinos. As technology has advanced within the casino industry, Bally has also kept pace, supporting networked progressive-jackpot games as well as video lottery and mobile-gaming applications. Let's take an early look at what's been happening with Bally Technologies over the past quarter and what we're likely to see in its quarterly report.

Stats on Bally Technologies

Analyst EPS Estimate

$0.94

Change From Year-Ago EPS

21%

Revenue Estimate

$256.36 million

Change From Year-Ago Revenue

4.3%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can Bally earnings shuffle higher?
Analysts have been mildly optimistic about the prospects for Bally earnings, raising their June-quarter estimates by a penny per share and adding a nickel to their full-year fiscal 2014 projections. But the stock has moved quite sharply higher, rising more than 40% since early May.

Without a doubt, the key move for Bally during the quarter was its decision to purchase SHFL entertainment (NASDAQ: SHFL  ) for $1.3 billion. By acquiring the maker of Shuffle Master card-shuffling devices and other gaming equipment, Bally will add substantially to its product line, essentially giving it the capacity to offer full-service solutions to its casino customers.

But the real beauty of the deal is that it sets the stage for what seems like the increasingly inevitable move toward online gaming. Bally and International Game Technology (NYSE: IGT  ) were the first companies to win U.S.-based online gaming licenses last year, and although state-specific licenses will be far less lucrative than nationwide gaming would be, Bally is in good position to compete if future law changes legalize gambling on the national level. Bally has already made its online games available on several gaming platforms, and the company has also teamed up with payment- processing company Optimal Payments in order to provide gaming-payment services for its online offerings.

Still, Bally faces plenty of competition. Earlier this year, Scientific Games (NASDAQ: SGMS  ) and WMS Industries (NYSE: WMS  ) announced their own merger plans, and the combined entity will definitely be a force to be reckoned with, given its presence in slot machines and gaming devices as well as lottery-based products and equipment. More worrisome is the fact that overall economic conditions appear to have held back Scientific Games in its most recent results, with the company reporting a wider loss from the year-ago quarter despite a 4% rise in revenue and the gaming segment in particular posting an operating loss for the quarter.

In the Bally earnings report, watch for the company to give more guidance about how the SHFL acquisition will help Bally's earnings going forward. Given the huge impact the move will have on its overall business, investors want to see evidence that it will also be more profitable in the years to come.

In planning your own financial future, you don't want to leave your investing to chance. Your best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Click here to add Bally Technologies to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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: 2595738, ~/Articles/ArticleHandler.aspx, 9/16/2014 5:43:02 AM

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