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Can You Imagine How Elated Scientific Games' (NASDAQ:SGMS) Shareholders Feel About Its 376% Share Price Gain?

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Scientific Games Corporation (NASDAQ:SGMS) shareholders have seen the share price descend 15% over the month. But that doesn't change the fact that the returns over the last year have been spectacular. In fact, it is up 376% in that time. Arguably, the recent fall is to be expected after such a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

See our latest analysis for Scientific Games

Because Scientific Games made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Scientific Games actually shrunk its revenue over the last year, with a reduction of 20%. So it's very confusing to see that the share price gained a whopping 376%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

This free interactive report on Scientific Games' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Scientific Games has rewarded shareholders with a total shareholder return of 376% in the last twelve months. That's better than the annualised return of 34% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Scientific Games better, we need to consider many other factors. Even so, be aware that Scientific Games is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

But note: Scientific Games may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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