Light & Wonder Inc.
(ASX: LNW)Share Price and News
About Light & Wonder
Light & Wonder Inc., formerly known as Scientific Games Corporation, is a global gaming company headquartered in Las Vegas, Nevada. The company specialises in providing a comprehensive suite of gaming products and services, including slot machines, table games, shuffling machines, and casino management systems.
Its well-known brands include Bally, WMS, and Shuffle Master. In addition to traditional gaming offerings, Light & Wonder has a significant presence in the digital gaming space through its SciPlay and iGaming segments. These divisions focus on social casino games and online gaming platforms, catering to a diverse global audience.
Light & Wonder's Company History
The company began in the 1970s and initially focused on providing secure instant lottery tickets. It adopted the name Scientific Games Corporation in 2001 after acquiring a company by that name which made instant lottery equipment.
Over the years, it expanded its portfolio through strategic acquisitions, including WMS Industries in 2013 and Bally Technologies in 2014. By 2020, it had a diverse business in the gambling industry. However, it also had $9.2bn in debt and was forced to sell its lottery and sports betting business to focus on casino gaming.
In 2022, the company rebranded as Light & Wonder Inc. to reflect its broader focus on gaming and entertainment. While it had been NASDAQ-listed for many years, it opted to list Down Under due to interest from Australian fund managers that could only invest in Australian-listed shares.
This rebranding marked a significant strategic shift, emphasising digital gaming and cross-platform content delivery. The company also divested its lottery and sports betting businesses to concentrate on its core gaming operations.
Future Outlook of Light & Wonder (ASX: LNW)
Light & Wonder's future outlook appears promising, driven by strategic initiatives and favourable industry trends. Analysts project steady growth, with revenue expected to reach approximately US$3.43 billion in 2025, representing a 7.5% increase from 2024. Earnings per share (EPS) are anticipated to rise to approximately US$5.74, indicating strong operational performance and a 56.5% growth over the previous year.
The global gaming industry is experiencing a resurgence, with increased demand for both land-based and digital gaming solutions. Light & Wonder's diversified portfolio positions it well to capitalise on these trends, particularly in the expanding iGaming and social casino markets. The company is actively pursuing growth opportunities, including the recent acquisition of Grover Gaming's charitable gaming assets.
This move enhances Light & Wonder's product offerings and expands its footprint in the charitable gaming sector. While the gaming industry is generally resilient, potential risks include regulatory changes, economic downturns, and increased competition. However, Light & Wonder's strategic focus and diversified operations help mitigate these risks.
Trump's tariffs are a particular risk because most of its machines are made in China. For now it is confident that 'Trump Always Chickens Out' but may need to act if this turns out not to be the case.
One issue facing the company is whether or not it has a future listed on the NASDAQ and should delist or perhaps just move its primary listing to Australia. On one hand, it has more coverage down under and has seen a number of competitors on the NASDAQ delist. The other, the bulk of its business is made in the USA.
Is LNW a Good Stock to Buy?
Considering Light & Wonder's strong financial performance, strategic growth initiatives, and favourable industry trends, we think that this stock presents a compelling investment opportunity. With a forward P/E of 14.6x, Light & Wonder is reasonably valued compared to industry peers.
Its diversified operations across various gaming segments and geographies reduce overall risk. However, investors should remain aware of potential regulatory and market risks inherent in the gaming industry (particularly competition).
Investors should also keep in mind that it does not pay dividends and there'll likely be hell to pay if it doesn't reach its goal of EBITDA goal of US$1.4bn by the end of FY25. The company as indicated it is on track, but it'll make all the more trouble if it misses.
Our Stock Analysis
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Frequently Asked Questions
As of now, Light & Wonder Inc. does not pay a dividend. The company focuses on reinvesting earnings to support growth and innovation across its gaming segments.