Over the last six months, Light & Wonder’s shares have sunk to $88.21, producing a disappointing 13.2% loss - a stark contrast to the S&P 500’s 5.2% gain. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Given the weaker price action, is this a buying opportunity for LNW? Find out in our full research report, it’s free.
Why Does LNW Stock Spark Debate?
With names as crazy as Ultimate Fire Link Power 4 for its products, Light & Wonder (NASDAQ: LNW) is a gaming company supplying the casino industry with slot machines, table games, and digital games.
Two Positive Attributes:
1. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Light & Wonder’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
2. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Light & Wonder’s has increased over the last few years. its rising ROIC is a good sign and could suggest its competitive advantage or profitable growth opportunities are expanding.
One Reason to be Careful:
Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Light & Wonder grew its sales at a weak 1.4% compounded annual growth rate. This wasn’t a great result, but there are still things to like about Light & Wonder. 
Final Judgment
Light & Wonder’s merits more than compensate for its flaws. With the recent decline, the stock trades at 13.2× forward P/E (or $88.21 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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