A report by Zacks Investment Research published last week in Forbes magazine singled out slot and system manufacturer Bally Technologies as a good investment opportunity in the supply side of the industry.
The report, which recommended gaming suppliers as an investment in the industry that avoids “the cutthroat competitive environment that exists between the many casinos,” cites rising earning estimates as a reason to look at Bally.
“A big focus of the company is the slot machine segment, though it has some exposure in ‘smart’ table games too,” the report said. “This approach has been a winning strategy for BYI in 2013, as the stock has appreciated by more than 70 percent in the time frame. Yet, despite this huge surge, BYI could still be a great pick thanks to a modest PE below 20, and rising earnings estimates.”
The report identified positive long-term earnings estimates as a strength for Bally stock: “Although the near-term earnings estimate revision picture is a bit choppy, the longer-term revision results look pretty promising. Six estimates for BYI’s full-year earnings have gone higher in the past 60 days (with zero going lower), while five have gone higher (compared to zero lower) for the next year time frame.
“Plus, over the past two months, earnings estimates have moved a bit higher for the current year period, enough to give BYI a nearly 17 percent projected EPS growth rate. With growth of nearly 13 percent projected for the next year period, it doesn’t appear as if BYI’s story will be slowing down too much either. If investors are worried about BYI meeting these higher growth levels, don’t worry too much, as the company has an amazing track record at earnings season. The firm hasn’t missed since 2011, including 10 straight beats, so BYI seems to have the surprise momentum behind its stock.”
The report cited these reasons for issuing a “Zacks Rank No. 1 (Strong Buy)” rating for the company.