Multimedia Games (NASDAQ: MGAM) and Scientific Games (NASDAQ:SGMS) are both cyclical consumer goods & services companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.
Insider & Institutional Ownership
64.0% of Scientific Games shares are owned by institutional investors. 40.6% of Scientific Games shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a breakdown of current ratings for Multimedia Games and Scientific Games, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Scientific Games has a consensus price target of $42.50, suggesting a potential downside of 19.28%. Given Scientific Games’ higher probable upside, analysts clearly believe Scientific Games is more favorable than Multimedia Games.
Risk and Volatility
Multimedia Games has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Scientific Games has a beta of 2.64, meaning that its share price is 164% more volatile than the S&P 500.
This table compares Multimedia Games and Scientific Games’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Multimedia Games and Scientific Games’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Scientific Games||$2.88 billion||1.64||-$353.70 million||($3.50)||-15.04|
Multimedia Games has higher earnings, but lower revenue than Scientific Games. Scientific Games is trading at a lower price-to-earnings ratio than Multimedia Games, indicating that it is currently the more affordable of the two stocks.
Scientific Games beats Multimedia Games on 6 of the 9 factors compared between the two stocks.
About Multimedia Games
Multimedia Games Holding Company, Inc. (Multimedia Games), incorporated on August 30, 1991, is engaged in designing, manufacturing and supplying gaming machines and systems to commercial and Native American casino operators in North America, as well as, domestic and selected international lottery operators, and commercial bingo gaming facility operators. The Company’s revenues are generated from the operation of gaming machines in revenue-sharing arrangements and from the sale of gaming machines and systems that features licensed game themes. Multimedia Games places its revenue-sharing machines and sells its gaming machines and systems in Class II, Class III, video lottery terminal (VLT) and electronic bingo settings. The Company has added eTables to its product portfolio with the acquisition of PokerTek, Inc. Additionally, it offers cash access and compliance solutions.
About Scientific Games
Scientific Games Corporation is a developer of technology-based products and services and associated content for the gaming, lottery and interactive gaming industries. Its segments include Gaming, Lottery and Interactive. Its portfolio includes gaming machines and game content, casino management systems, table game products and services, instant and draw-based lottery games, server-based gaming and lottery systems, sports betting technology, lottery content and services, loyalty and rewards programs, interactive gaming and social casino solutions. Gaming segment designs, develops, manufactures, markets and distributes a portfolio of gaming products and services. Lottery segment consists of its systems-based services and product sales business and its instant games business. Its Interactive business segment includes social (non-wagering) gaming and interactive real-money gaming (RMG). Its games are available on Facebook, Amazon.com, the Apple app store and Android app on Google play.
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