A month has gone by since the last earnings report for Light & Wonder (LNW). Shares have added about 1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Light & Wonder due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Light & Wonder Beats Q3 Earnings Estimates on Higher Revenues

Light and Wonder reported relatively healthy third-quarter 2024 results, with the top line missing the Zacks Consensus Estimate but the bottom line beating the same. The Las Vegas-based cross-platform games and entertainment company reported the ninth consecutive quarter of double-digit revenue growth, exemplifying its portfolio strength and resilient business model.

Bottom Line

Net income in the reported quarter was $64 million or 71 cents per share compared with $75 million or 81 cents per share in the year-ago quarter. The decrease in GAAP earnings despite top-line growth was primarily due to higher operating costs.

Non-GAAP net income was $1.34 per share, which beat the Zacks Consensus Estimate by 18 cents.

Revenues

Total revenues in the third quarter of 2024 rose to $817 million from $731 million in the prior-year quarter, propelled by growth in all business verticals. However, the top line missed the consensus estimate of $827 million. 

Services revenues increased to $530 million from $503 million in the year-ago quarter, while product sales were $287 million, up from $228 million in the year-ago quarter. This is the 14th consecutive quarter of consolidated revenue growth for the company.

Gaming revenues were $537 million, up 15% year over year, driven by sales growth of gaming machines and healthy demand trends in gaming operations and gaming systems. 

Revenues from SciPlay increased to $206 million from $196 million in the year-ago quarter. The year-over-year increase was mainly fueled by the core social casino business. 

The average revenue per daily active user increased to $1.04 in the quarter, up 8% year over year. Greater engagement and monetization for players enhanced the top line for this segment. iGaming revenues increased to $74 million from $70 million, up 6% from the year-ago quarter, driven by continued momentum in North America and Europe, as well as strong content launches.

Other Details

Non-GAAP consolidated AEBITDA was $319 million compared with $286 million in the year-ago quarter, driven by revenue growth and sustained margin strength across all businesses. AEBITDA margin remained flat at 39%.

Cash Flow & Liquidity

For the first nine months of 2024, the company generated $430 million of cash from operating activities compared with $423 million in the year-ago period. As of Sept. 30, 2024, it had $347 million in cash and cash equivalents with $3.85 billion of long-term debt.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -12.2% due to these changes.

VGM Scores

At this time, Light & Wonder has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Light & Wonder has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Light & Wonder belongs to the Zacks Gaming industry. Another stock from the same industry, Electronic Arts (EA), has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

Electronic Arts reported revenues of $2.08 billion in the last reported quarter, representing a year-over-year change of +14.2%. EPS of $2.15 for the same period compares with $1.46 a year ago.

Electronic Arts is expected to post earnings of $3.43 per share for the current quarter, representing a year-over-year change of +15.9%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Electronic Arts. Also, the stock has a VGM Score of C.

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