Light & Wonder: A Bargain At First Glance, But Trades Above Peers After 10% Drop

2025-03-31 13:28:48 ET

Summary

• Light & Wonder successfully turned around by selling lottery and sports betting divisions, reducing debt, and focusing on digital gaming, resulting in a 900% stock price increase.
• Post-restructuring, Light & Wonder's margins improved significantly, with gross margins jumping from 60% to 70% and EBIT margins from the early teens to the low twenties.
• Despite strong fundamentals and growth, Light & Wonder appears slightly overvalued compared to industry peers, suggesting a 'Hold' rating with a price target of $85.
• Future growth is expected from gaming, SciPlay, and iGaming segments, but current valuation warrants caution, recommending a buy at mid-to-low $80s and a sell above $100.

Light & Wonder's Turnaround So Far

While IGT ( IGT ) is doubling down on lotteries and offloading its digital gaming businesses, Light & Wonder, Inc. ( LNW ) took the exact opposite bet at least four years ago. They cashed out of the lottery and sports betting scene to go all-in on digital gaming—because apparently, in this industry, there's more than one way to hit the jackpot.

Big win or a bet they’ll regret?

For those who don’t remember, Light & Wonder used to be a completely different company....

Read the full article on Seeking Alpha

For further details see: