WMS Industries (WMS) Has Valuation, Offerings to Beat Lowered Expectations - Barron's
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WMS Industries (NYSE: WMS) shares are looking strong Wednesday following positive comments from Barron's.
Barron's notes WMS shares are down nearly 50 percent on the year, compared to peers International Game Tech (NYSE: IGT) and Bally Tech (NYSE: BYI), which are flat and down 12 percent, respectively, over the same period. But that could all change very soon.
WMS is currently trading for just about 4x enterprise value-to-EBITDA, making shares ripe for the picking. Peers are going for about 8x EV-to-EBITDA. One analyst even said the market is treating WMS like its headed into bankruptcy.
Barron's notes casino operators like Las Vegas Sands (NYSE: LVS), MGM Int'l (NYSE: MGM), and Wynn (Nasdaq: WYNN) have been relying on table games to supplement dwindling income elsewhere, and the current environment in the U.S. gives little reason to invest in new technology.
Additionally, WMS is facing headwinds in trying to get new technology through the regulatory process, leading it to only introduce one new game in 2010, compared to four typically release annually. The results showed up in WMS' fourth-quarter report. Margin and average sales price numbers took a hit, and some analysts called the results "sloppy," according to Barron's.
Bulls on WMS say the company didn't issue new sales numbers, and delayed games will hit floors in 2012.
With expectations low and valuation at a discount, Barron's thinks now is the time to get in ahead of the slot machine revamp.
Shares are up about 2 percent Wednesday afternoon.
Barron's notes WMS shares are down nearly 50 percent on the year, compared to peers International Game Tech (NYSE: IGT) and Bally Tech (NYSE: BYI), which are flat and down 12 percent, respectively, over the same period. But that could all change very soon.
WMS is currently trading for just about 4x enterprise value-to-EBITDA, making shares ripe for the picking. Peers are going for about 8x EV-to-EBITDA. One analyst even said the market is treating WMS like its headed into bankruptcy.
Barron's notes casino operators like Las Vegas Sands (NYSE: LVS), MGM Int'l (NYSE: MGM), and Wynn (Nasdaq: WYNN) have been relying on table games to supplement dwindling income elsewhere, and the current environment in the U.S. gives little reason to invest in new technology.
Additionally, WMS is facing headwinds in trying to get new technology through the regulatory process, leading it to only introduce one new game in 2010, compared to four typically release annually. The results showed up in WMS' fourth-quarter report. Margin and average sales price numbers took a hit, and some analysts called the results "sloppy," according to Barron's.
Bulls on WMS say the company didn't issue new sales numbers, and delayed games will hit floors in 2012.
With expectations low and valuation at a discount, Barron's thinks now is the time to get in ahead of the slot machine revamp.
Shares are up about 2 percent Wednesday afternoon.
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