Light & Wonder Inc Chess Depository Interest LNW

Morningstar Rating
A$115.05 −0.35 (0.30%)
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Company Report

Gaming Machines Are Crucial to Light & Wonder's Fortunes

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, i-gaming, and electronic gaming machines. Most of Light & Wonder's revenue is derived from electronic gaming machines. Within this segment, revenue comes both from leased machines, which attract a fee per day or a percentage of the wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture a material, maintainable incremental share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Price vs Fair Value

LNW is trading at a LOCK|<%?D%G premium.
Price
A$115.40
Fair Value
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Uncertainty
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1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Stringent regulatory licensing requirements create barriers to entry for new players, protecting the market share of Light & Wonder and other incumbents.

Bears

Regulatory tightening of land-based gaming, particularly in Australia, may dampen demand for Light & Wonder’s electronic gaming machines.

News

Trading Information

Previous Close Price
A$115.40
Day Range
A$114.07–117.19
52-Week Range
A$96.79–193.00
Bid/Ask
A$114.62 / A$115.05
Shares Outstanding
74.78M
Market Cap
A$8.59B
Volume/Avg
114,416 / 253,283

Key Statistics

Price/Earnings (Normalized)
11.59
Price/Sales
1.90
Dividend Yield (Trailing)
0.00%
Dividend Yield (Forward)
0.00%
Dividend Payment Schedule
—
Total Yield
13.28%

Company Profile

Light & Wonder is principally an electronic gaming machine manufacturer, selling machines to pubs, clubs, and casinos. The firm is licensed in most jurisdictions, allowing gambling globally. Light & Wonder is one of the three largest players in the space, along with International Game Technology and Aristocrat Leisure. SciPlay, about one-fourth of revenue, develops and distributes casual mobile games, principally in the social casino niche. The more nascent i-gaming business sits between these two businesses, providing digital content and capabilities to real-money gaming providers.
Sector
Consumer Cyclical
Industry
Gambling
Stock Style Box
Small Core
Total Number of Employees
6,800

Competitors

Valuation

Metric
LNW
DKNG
WYNN
Price/Earnings (Normalized)
11.5950.5316.74
Price/Book Value
20.2517.18—
Price/Sales
1.901.571.06
Price/Cash Flow
7.2825.935.30
Price/Earnings
LNW
DKNG
WYNN

Financial Strength

Metric
LNW
DKNG
WYNN
Quick Ratio
1.100.690.84
Current Ratio
1.731.020.91
Interest Coverage
2.05−3.522.03
Quick Ratio
LNW
DKNG
WYNN

Profitability

Metric
LNW
DKNG
WYNN
Return on Assets (Normalized)
9.10%1.85%3.62%
Return on Equity (Normalized)
128.34%11.60%—
Return on Invested Capital (Normalized)
15.24%4.30%8.42%
Return on Assets
LNW
DKNG
WYNN

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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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LOCK|d%$@S!>LOCK|pg!$j$14B
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DraftKings Inc Ordinary Shares - Class A
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LOCK|&lc@kpLOCK|!G$<p$10B
The Lottery Corp Ltd
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—LOCK|^!$8B
Lottomatica Group SpA ADR
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—LOCK|>b#J$6B
Light & Wonder Inc Ordinary Shares
LNWO
LOCK|H#md^&^LOCK|@c$6B

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