Head-To-Head Review: Multimedia Games Holding (MGAM) & Scientific Games Corp (SGMS)

Multimedia Games Holding (NASDAQ: MGAM) and Scientific Games Corp (NASDAQ:SGMS) are both gambling & gaming machine manufacturers companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Insider & Institutional Ownership

62.7% of Scientific Games Corp shares are owned by institutional investors. 40.6% of Scientific Games Corp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Multimedia Games Holding and Scientific Games Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Multimedia Games Holding N/A N/A N/A
Scientific Games Corp -10.29% N/A -3.47%

Risk and Volatility

Multimedia Games Holding has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, Scientific Games Corp has a beta of 2.64, suggesting that its share price is 164% more volatile than the S&P 500.

Earnings & Valuation

This table compares Multimedia Games Holding and Scientific Games Corp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Multimedia Games Holding N/A N/A N/A $1.03 35.38
Scientific Games Corp $2.88 billion 1.55 -$353.70 million ($3.50) -14.27

Multimedia Games Holding has higher revenue, but lower earnings than Scientific Games Corp. Scientific Games Corp is trading at a lower price-to-earnings ratio than Multimedia Games Holding, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Multimedia Games Holding and Scientific Games Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Multimedia Games Holding 0 0 0 0 N/A
Scientific Games Corp 0 3 2 0 2.40

Scientific Games Corp has a consensus price target of $42.50, suggesting a potential downside of 14.91%. Given Scientific Games Corp’s higher probable upside, analysts clearly believe Scientific Games Corp is more favorable than Multimedia Games Holding.

Summary

Scientific Games Corp beats Multimedia Games Holding on 6 of the 9 factors compared between the two stocks.

About Multimedia Games Holding

Multimedia Games Holding Company, Inc. (Multimedia Games), incorporated on August 30, 1991, is engaged in designing, manufacturing and supplying gaming machines and systems to commercial and Native American casino operators in North America, as well as, domestic and selected international lottery operators, and commercial bingo gaming facility operators. The Company’s revenues are generated from the operation of gaming machines in revenue-sharing arrangements and from the sale of gaming machines and systems that features licensed game themes. Multimedia Games places its revenue-sharing machines and sells its gaming machines and systems in Class II, Class III, video lottery terminal (VLT) and electronic bingo settings. The Company has added eTables to its product portfolio with the acquisition of PokerTek, Inc. Additionally, it offers cash access and compliance solutions.

About Scientific Games Corp

Scientific Games Corporation is a developer of technology-based products and services and associated content for the gaming, lottery and interactive gaming industries. Its segments include Gaming, Lottery and Interactive. Its portfolio includes gaming machines and game content, casino management systems, table game products and services, instant and draw-based lottery games, server-based gaming and lottery systems, sports betting technology, lottery content and services, loyalty and rewards programs, interactive gaming and social casino solutions. Gaming segment designs, develops, manufactures, markets and distributes a portfolio of gaming products and services. Lottery segment consists of its systems-based services and product sales business and its instant games business. Its Interactive business segment includes social (non-wagering) gaming and interactive real-money gaming (RMG). Its games are available on Facebook, Amazon.com, the Apple app store and Android app on Google play.

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