Shuffle Master (SHFL)
is a Zacks #2 Rank (Buy) after seeing earnings estimates move
meaningfully higher.
Company Description
Shuffle Master manufactures and distributes gaming devices, and
operates inter-casino linked systems and slot routes. It leases,
licenses, and sells its products. The company operates through
four segments: Utility, Proprietary Table Games, Electronic Table
Systems, and Electronic Gaming Machines. The company markets its
products to casinos and other legal gaming establishments through
its direct sales force, and various distributors and/or
representatives worldwide. Shuffle Master, Inc. was founded in
1983 and is headquartered in Las Vegas, Nevada.
Shuffle Master Tops Expectations in Each of the Last Three
Quarters
Shuffle Master has topped the Zacks Consensus Estimate in each of
the last three quarters. While the average beat over the last
three quarters has only a little more than two cents, its
translates into 19% positive surprise.
The positive surprises have been beneficial for shareholders, as
the stock has moved higher by an average of 12% following the
beats. The last two beats have also included stronger top line
performance as well, with the surprises growing on an absolute and
percentage basis.
Shuffle Master Most Recent Earnings
On March 5, 2012, Shuffle Master reported revenue of $56 million,
$8 million more than the Zacks Consensus Estimate, and higher than
the $44 million reported in the year ago period. Earnings per
share of $0.14 was $0.04 higher than expected or a 40% positive
earnings surprise. The stock moved higher by 10% following the
beat.
Estimates have moved higher
Shuffle Master has seen its earnings estimates move higher over
the last few months. The Zacks Consensus Estimate in February
2012 was $0.70 and has since moved to $0.76. Estimates for 2013
were also bumped higher by a penny over the same time frame.
Valuations
Shuffle Master trades at 26x trailing PE, slightly above the
industry average of 23x. The forward PE of 22x has Shuffle Master
trading at a discount to the industry average of 23x. Price to
book and price to sales are a different story. Both multiples are
3.8x for the company and 1.5x for the industry average. Generally
these multiples are a little more shuffled up.
The Chart
The chart shows Shuffle Master in an upward channel for the past
several months. Currently it is at the low end of the channel and
has not breached the support line. This implies that the stock
should remain in this channel and could move back the high end
after testing the low. The stock is well above the 200 day moving
average and has only recently moved below the 21 day moving
average. The 50 day moving average appears to be a key level of
support for the stock. Shuffle Master is a Zacks #2 Rank
(Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
for
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1
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