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Light & Wonder (LNW) shares rallied 4.3% in the last trading session to close at $105.99. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 11.5% gain over the past four weeks.
LNW has inked an agreement to acquire the charitable gaming assets of Grover Gaming for $850 million in cash. Charitable Gaming space is expected to grow at a substantial rate in upcoming years. The acquisition will enable LNW to capitalize on this incremental revenue opportunity. This will allow LNW to expand its market reach by utilizing Grover’s strong customer relationship. Management also believes that the cultural alignment of both companies will streamline the integration process.
The acquisition of Grover Charitable Gaming is in line with LNW’s cross-platform strategy. The acquisition will likely be accretive to LNW’s profitability. The company is expected to derive high single-digit adjusted NPATA (Net Profit After Tax and Amortization) in the first full calendar year post acquisition. This has buyoed investors' interests and triggered the uptrend.
This instant-win lottery ticket maker is expected to post quarterly earnings of $1.08 per share in its upcoming report, which represents a year-over-year change of +48%. Revenues are expected to be $795.27 million, up 3.3% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Light & Wonder, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LNW going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Light & Wonder is a member of the Zacks Gaming industry. One other stock in the same industry, Century Casinos (CNTY), finished the last trading session 2.2% lower at $3.11. CNTY has returned 0.3% over the past month.
Century Casinos' consensus EPS estimate for the upcoming report has changed -42.3% over the past month to -$0.59. Compared to the company's year-ago EPS, this represents a change of -63.9%. Century Casinos currently boasts a Zacks Rank of #4 (Sell).