A month has gone by since the last earnings report for Light & Wonder (LNW). Shares have added about 6.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Light & Wonder due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Light & Wonder’s (LNW) Q4 Earnings Miss, Revenues Up Y/Y

Light & Wonder reported mixed fourth-quarter 2023 results, wherein the top line beat the Zacks Consensus Estimate but the bottom line missed the same. The Las Vegas-based cross-platform games and entertainment company reported higher revenues year over year, backed by rapid sales growth across all segments.

Bottom Line

Net income from continuing operations increased to $67 million or 73 cents per share from $21 million or 12 cents per share reported in the year-ago quarter, which missed the Zacks Consensus Estimate by 3 cents. Higher revenues primarily contributed to the year-over-year growth.

For 2023, the company recorded a net income of $180 million or $1.75 per share from continuing operations against a net loss of $176 million or a loss of $2.09 per share a year ago.

Revenues

Total revenues in fourth-quarter 2023 rose to $770 million from $682 million in the prior-year quarter, backed by healthy growth in all business segments. The top line beat the consensus estimate of $753 million. Services revenues increased to $515 million year over year from $466 million, while that from Products grew 18% to $255 million from $216 million in the prior-year quarter.

Gaming revenues soared 13% year over year to $496 million from $438 million in the year-ago quarter. Solid growth in Gaming machine sales and positive demand trends for Gaming operations, systems and tables supported the top-line improvement from this segment.

Revenues from SciPlay witnessed a solid 12% increase year over year to $204 million, primarily driven by the core social casino business and the acquisition of the privately held mobile and social game company Come2Play. Record net sales in this segment broke the quarterly revenue record for the sixth consecutive quarter.

iGaming revenues increased to $70 million from $62 million in the prior-year quarter. Healthy traction in the United States and international markets boosted net sales in this segment.

In 2023, revenues were $2.9 billion compared with $2.5 billion in 2022.

Other Details

Non-GAAP consolidated AEBITDA was $302 million, up 14% year over year, driven by growth in the Gaming business. AEBITDA margin was 39%, on par with the year-ago quarter’s figure.

Cash Flow & Liquidity

For 2023, the company registered a cash flow of $590 million in operating activities against a cash utilization of $381 million a year ago. As of Dec 31, 2023, it had $425 million in cash and cash equivalents with $3.85 billion of long-term debt compared with respective figures of $914 million and $3.87 billion in 2022.



How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Light & Wonder has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Light & Wonder has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Light & Wonder belongs to the Zacks Gaming industry. Another stock from the same industry, MGM Resorts (MGM), has gained 10.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.

MGM reported revenues of $4.38 billion in the last reported quarter, representing a year-over-year change of +21.8%. EPS of $1.06 for the same period compares with $0.69 a year ago.

MGM is expected to post earnings of $0.62 per share for the current quarter, representing a year-over-year change of +40.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.

MGM has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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