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Shuffle Master (SHFL): Zacks Rank Buy

Brian Bolan

Shuffle Master (SHFL) is a Zacks #2 Rank (Buy) after seeing earnings estimates move meaningfully higher.

Company Description

Shuffle Master manufactures and distributes gaming devices, and operates inter-casino linked systems and slot routes. It leases, licenses, and sells its products. The company operates through four segments: Utility, Proprietary Table Games, Electronic Table Systems, and Electronic Gaming Machines. The company markets its products to casinos and other legal gaming establishments through its direct sales force, and various distributors and/or representatives worldwide. Shuffle Master, Inc. was founded in 1983 and is headquartered in Las Vegas, Nevada.

Shuffle Master Tops Expectations in Each of the Last Three Quarters

Shuffle Master has topped the Zacks Consensus Estimate in each of the last three quarters. While the average beat over the last three quarters has only a little more than two cents, its translates into 19% positive surprise.

The positive surprises have been beneficial for shareholders, as the stock has moved higher by an average of 12% following the beats. The last two beats have also included stronger top line performance as well, with the surprises growing on an absolute and percentage basis.

Shuffle Master Most Recent Earnings

On March 5, 2012, Shuffle Master reported revenue of $56 million, $8 million more than the Zacks Consensus Estimate, and higher than the $44 million reported in the year ago period. Earnings per share of $0.14 was $0.04 higher than expected or a 40% positive earnings surprise. The stock moved higher by 10% following the beat.

Estimates have moved higher

Shuffle Master has seen its earnings estimates move higher over the last few months. The Zacks Consensus Estimate in February 2012 was $0.70 and has since moved to $0.76. Estimates for 2013 were also bumped higher by a penny over the same time frame.


Shuffle Master trades at 26x trailing PE, slightly above the industry average of 23x. The forward PE of 22x has Shuffle Master trading at a discount to the industry average of 23x. Price to book and price to sales are a different story. Both multiples are 3.8x for the company and 1.5x for the industry average. Generally these multiples are a little more shuffled up. The Chart

The chart shows Shuffle Master in an upward channel for the past several months. Currently it is at the low end of the channel and has not breached the support line. This implies that the stock should remain in this channel and could move back the high end after testing the low. The stock is well above the 200 day moving average and has only recently moved below the 21 day moving average. The 50 day moving average appears to be a key level of support for the stock. Shuffle Master is a Zacks #2 Rank (Buy).

Shuffle Master - ticker SHFL >

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service You can follow him at twitter.com/bbolan1

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