Hello Friends! Thanks for stopping by. It looks like the market is taking a rest in here...with a small correction as it digests the latest statistics and looks for direction. Last couple of days, I haven't seen many on the most advancing list to meet our criteria here. However, Scientific Games looks like it may fit the bill.
Currently SGMS is trading at $11.55, up $1.66 on the day or 16.78%. According to money.cnn.com, SGMS is "...a provider of services, systems and products to both the pari-mutuel gaming and instant ticket lottery industries."
On July 24, 2003, according to the NYTimes on the Web, SGMS reported their second quarter results: revenues increased 13% to $128.8 million from the $114.3 million reported in the second quarter of 2002. Pre-tax income increased 111% to $19.6 million in the second quarter of 2003 from $9.3 million in the same quarter in 2002.
Looking at Morningstar.com, we find a steady growth in revenues from $159 million in 1998, $211 million in 1999, $299.9 million in 2000, $440.2 million in 2001, and $455.3 million in 2002. Extrapolating the current quarter would get us over $500 million in revenue in 2003.
Free cash flow has been improving nicely the past several years per Morningstar: $(14) million in 2000, $16 million in 2001, and $39 million in 2002.
The assets/liabilities picture is not quite as pretty as some of the ones we review but with the improving free cash flow, this may not be as big a problem: $34.9 million in cash and $96.4 million in other current assets vs. $84.9 million in current liabilities and $405.4 million in long-term debt.
According to Yahoo.com (have you noticed the new format on the Yahoo financial statements?), the market cap of SGMS is $680.54 million. The trailing p/e is a reasonable 10.99. Price/sales is low at 1.22 as well. There are 60.12 million shares outstanding with 36.80 million of them that float. No dividend is paid. There are 1.96 million shares out short...representing 5.32% of the float or 3.765 trading days to cover.
Except for the relatively high level of long-term debt, this stock looks nice. The p/e is low, the growth is consistent, the free cash flow is expanding, and there are plenty of shares already sold that need to be covered. You might well do worse than buy a few shares of this company!
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