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Loss-Making Scientific Games Corporation (NASDAQ:SGMS) Expected To Breakeven

Simply Wall St

Scientific Games Corporation's (NASDAQ:SGMS): Scientific Games Corporation develops technology-based products and services, and related content for the gaming, lottery, and digital gaming industries worldwide. The US$2.1b market-cap company’s loss lessens since it announced a -US$352.4m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$245.4m, as it approaches breakeven. As path to profitability is the topic on SGMS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SGMS’s growth and when analysts expect the company to become profitable.

View our latest analysis for Scientific Games

SGMS is bordering on breakeven, according to the 11 Hospitality analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$64m in 2020. So, SGMS is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which SGMS must grow year-on-year. It turns out an average annual growth rate of 90% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:SGMS Past and Future Earnings, September 19th 2019

Given this is a high-level overview, I won’t go into details of SGMS’s upcoming projects, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. SGMS currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on SGMS, so if you are interested in understanding the company at a deeper level, take a look at SGMS’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should look at:

  1. Valuation: What is SGMS worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SGMS is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Scientific Games’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.