Scientific Games Corporation (NASDAQ:SGMS), a hospitality company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $55.88 at one point, and dropping to the lows of $40.25. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Scientific Games’s current trading price of $41.6 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Scientific Games’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Scientific Games
What is Scientific Games worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.62% below my intrinsic value, which means if you buy Scientific Games today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $45.52, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Scientific Games’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Scientific Games look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. In the upcoming year, Scientific Games’s earnings are expected to increase by 99.01%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? SGMS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?