The move to a lease model may be saving the day at Shuffle Master
Revenue was up 14% from last year and lease revenue accounted for 47% of the total. This growth was in contrast to falling revenues at Bally Technologies
The quarter could have been better, but higher stock-based compensation and a high sales expense because of higher-than-expected sales were a drag on the bottom line. Still adjusted EPS of $0.13 was a penny higher than estimates, and revenue of $51.5 million beat estimates by nearly $2 million. This outperformance was partly because of Pennsylvania and Delaware allowing table games during a quarterly one-time event.
Overall performance was positive for Shuffle Master, especially given the weak economic environment. Given an innovative new line of i-Tables and continued traction in leasing, I see Shuffle Master being a consistent performer in the gaming supply business. I don't expect any sort of blowout performance given current gaming trends and a P/E ratio around 19, but after a rocky three years for the stock, shareholders might appreciate consistency and a lower debt load.
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