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 (SHFL +0.00%) 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 (IGT 1.12%) 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 (SGMS 0.25%) 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.
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