Why Shares of Scientific Games Corp Jumped

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  (NASDAQ: SGMS  ) were showing investors a good time today, gaining as much as 12%, and finishing up 8% after signing a contract with the French National Lottery.

So what: The lottery-and-gaming specialist said it signed a three-year contract with La Francaise des Jeux, the operator of the French Lottery and the world's second-largest instant lottery, continuing its partnership with FDJ. In addition to games it was already selling, Scientific Games is also now providing a 10 Euro Millionaire game, the only one on the market in France. The contract began on January 1 of this year, and Executive Vice President Jim Kennedy called it an "extremely positive achievement" for Scientific Games.  

Now what: The contract gives FDJ the option to renew it for three additional one-year periods. It's unclear how much incremental revenue the contract will give Scientific Games, but a three-year extension is certainly a positive sign. After its recent acquisition of WMS Industries, the FDJ deal looks like another reason to believe in the company's growth prospects. The bottom line is expected to turn positive when the company reports first-quarter earnings, which will include the additional games offered with FDJ. So far this year, Scientific Games has signed contracts with several states and expanded a licensing deal with toy-maker Hasbro, so additional business could be on the way.

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