A Good Time to Sell Scientific Games Corp (SGMS)

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Lowest Margin and Highest Valuation

Compared to WMS’ peers, including Bally Technologies Inc. (NYSE:BYI) and International Game Technology (NYSE:IGT), WMS generated the lowest operating margin at 14%. The operating margin of Bally and International Game were 23% and 26%, respectively. The buyout valuation seems to be the highest compared to the valuations of both Bally and International Game in the market. With the total market capitalization of $1.95 billion, Bally is valued at 7.96x EV/EBITDA. International Game is currently worth $4.05 billion, and it is valued at nearly 7x EV/EBITDA.

Looking Forward

As the deal has moved WMS’ share price by 60% to $24.70 per share, I think investors might just sell the shares at the current price and move on. With a 100% debt-financing deal, a burden of patent lawsuits against WMS, and a long pending time, there is a high probability that Scientific Games might withdraw the deal.

The article A Good Time to Sell This Gaming Company originally appeared on Fool.com and is written by Anh HOANG.

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