Casino games maker Light & Wonder is the IBD Stock Of The Day for Monday. LNW stock is rebounding from a key level toward a buy point, while already flashing bullish relative strength.
Las Vegas-based Light & Wonder makes a variety of casino games and iGaming apps, as well as provides a range of gambling products and services. Along with slot machines, table games and electronic casino games, Light & Wonder offers shufflers, chip sorters, electronic displays, payment solutions and other casino-related necessities.
On Monday, Light & Wonder announced it acquired the remaining 17% equity interest in mobile gambling game creator SciPlay for $22.95 per share in cash.
SciPlay will now operate as a wholly owned subsidiary of Light & Wonder. SCPL stock no longer trades on the Nasdaq as of Monday. Light & Wonder reported the deal in early August. The $22.95 per share price was a slight increase from the $20 per share offer in May for $422 million. That proposal implied a total enterprise value of $2.1 billion for SciPlay.
Meanwhile, Light & Wonder is scheduled to report Q3 results on Nov. 9. Analysts polled by FactSet expect earnings to rocket 228% to 46 cents per share adjusted, marking three consecutive quarters of triple-digit gains. Wall Street forecasts 10.3% revenue growth to $715 million, slowing after two quarters of accelerating growth.
Casino Stocks Climb
Casino stocks have been struggling, but climbed late last week after Las Vegas Sands noted strong recovery at its Macao and Singapore resorts during its Q3 earnings call Wednesday. Las Vegas Sands reported a 215% spike in casino revenues to just over $2 billion for the quarter, compared to $637 million in 2022.
LVS stock added 1.2% last week after paring gains Friday. Shares gained 3.3% on Monday.
Wynn Resorts rallied 3.9% Monday after HSBC initiated coverage of WYNN stock with a buy rating and $111 price target. HSBC initiated coverage on a variety of casino and hotel stocks.
Elsewhere, sports betting platform and Leaderboard member DraftKings is consolidating with a 34.49 buy point, jumping 4.8% to 28.36 on Monday. DKNG stock fell below its 10-day and 50-day moving averages last week after being named the IBD Stock Of The Day for Oct. 11. Shares rallied nearly 149% in 2023. Meanwhile, ARK Invest CEO Cathie Wood steadily sold shares throughout September.
LNW Stock
LNW stock rose to 74.84 Monday, bouncing off its 50-day moving average. Shares are trading in a flat base with a 79.06 buy point according to MarketSmith. Investors could view 77.25 as an early entry, but the market correction and Light & Wonder's upcoming earnings raise the risks.
However, MarketSmith data shows volume on the stock is fairly low and down 50% from its typical levels so far this week, which is something investors will want to consider as it could hamper any advance.
Light & Wonder's relative strength line is already at a new high, a bullish sign. That RS line, the blue line in the chart provided, tracks a stock's performance vs. the S&P 500 index.
LNW stock has a 94 RS Rating out of a best-possible 99. The strong RS Rating means the casino game maker outperformed 94% of all stocks in the IBD database over the past year.
Shares have an 81 EPS Rating. LNW stock has an 81 Composite Rating. The Composite Rating combines various technical indicators into one easy-to-read score.
LNW stock rallied roughly 28% in 2023. Shares are not too far off their all-time high of 90.20 from late October 2021.
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