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Why This Cheap Gaming-Focused Stock is a Strong Buy Right Now

Benjamin Rains

Everi Holdings Inc. EVRI provides technology for the casino industry, from gaming machines to fintech. EVRI shares have soared 80% in the last year but they are still cheap. Plus, Everi’s outlook appears strong heading into its fourth quarter 2019 earnings release and beyond.

The Everi Basics

Everi is a Las Vegas-based casino tech firm that offers a variety of gaming machines, services, and more. The company also sells financial services-focused products, player loyalty offerings, as well as intelligence and regulatory compliance solutions.

EVRI topped our Q3 earnings and revenue estimates back in November, with its Games and FinTech units helping drive its 12% top-line growth. Meanwhile, its quarterly earnings jumped from $0.03 in the year-ago period to $0.12 a share. And last quarter marked Everi’s 13th consecutive quarter of year-over-year revenue and Adjusted EBITDA expansion.

Investors should also note that the firm announced in mid-January that it extended its relationship with the New York Lottery for 10 more years. EVRI’s central system currently monitors and administers more than 17,000 Video Lottery Terminals across nine facilities in the state.

 

 

 

 

Other Fundamentals

Last quarter, Everi generated free cash flow of $11 million to push its total up to $39.3 million on the year. This strong cash generation has helped the company reduce its debt load.

The nearby chart, meanwhile, shows us just how impressive of a run EVRI stock has been on since the summer of 2016. EVRI stock was trading at roughly $1 per share in June 2016 and it currently hovers at around $13.60 per share.

Despite this run, Everi holds an “A” grade for Value in our Style Scores system, alongside an “A” for Growth. We can also see that its longer-term earnings revisions have trended heavily upward, especially for fiscal 2020 and 2021.

Outlook

Looking ahead, our current Zacks estimates call for Everi’s fourth quarter revenue to jump 11.6% to $133.3 million that would see it roughly match Q3’s growth. Meanwhile, its fiscal 2019 revenue is projected to pop over 11% to $521.4 million. The company’s 2020 sales are then expected to climb another 9.2% higher to $569.1 million.

At the bottom end of the income statement, Everi’s adjusted Q4 earnings are expected to skyrocket from a loss of -$0.04 per share in the year-ago period to +$0.08.

Overall, its fiscal 2019 EPS figure is projected to soar 250% from $0.10 to $0.35 a share. And in a sign of continued expansion, EVRI’s 2020 earnings are expected to reach $0.58, which would mark another 65% climb.

Bottom Line

Everi’s solid earnings estimate revisions activity helps it earn a Zacks Rank #1 (Strong Buy) at the moment. The stock also rocks an overall “A” VGM grade, with it set to report its Q4 results on March 2. And some investors might be attracted to its “cheap” price of well under $20 a share.

In the end, Everi appears to be a stock worth considering given its growth outlook, within a gaming-focused space that includes other highly-ranked stocks such as MGM Resorts International MGM, Churchill Downs CHDN, and fellow low-priced SciPlay Corporation SCPL. And let’s not forget that U.S. unemployment remains low and indexes rest right near their new highs despite coronavirus fears.

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