EmergingGrowth.com Reports on Multimedia Games, Riding a Wave of More Consumer
MIAMI, Florida, January 16, 2013
MIAMI, Florida, January 16, 2013 /PRNewswire/ --
EmergingGrowth.com, a leading digital financial media company, Reports on
Multimedia Games. Discussion also includes Las Vegas Sands Corp, Wynn
resorts, Bally Technologies, International Game Technology.
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Gambling is a cyclical industry that depends on the strength of the economy.
When consumers are struggling to pay the bills and keep food on the table,
they don't have the spare money for Vegas vacations or even trips to the local
casino. As a result, the recent American recession was bad news for companies
in the gambling industry.
Multimedia Games (NASDAQ: MGAM), a designer and manufacturer of gaming
technology for casinos around the World, was hit badly from this crash. The
company saw its share price fall by over 80% from 2007 to 2009 as casinos
stopped investing in new equipment. This trend carried across the industry as
the shares of major casino firms like Las Vegas Sands Corp (NYSE: LVS) and
Wynn Resorts (NASDAQ: WYNN) took similar nosedives.
Things finally look like their turning around for the gaming industry.
Multimedia Games has seen its revenue grow by 40% since 2010, earning total
revenue of about $156 million in 2012. This beat its 2012 revenue expectations
by about 8%. Most of this success came from growth in its domestic sales,
which are up about 24% since 2011.
These improvements have not gone unnoticed by investors. Multimedia Games has
seen its share price jump up from a low of around $2 to its current listing at
just over $14 a share. As the American economy continues to improve, this
should translate to even better performance from Multimedia Games.
How does Multimedia Games compare to its main competitors in the gaming
technology industry, Bally Technologies (NYSE: BYI) and International Game
Technology (NYSE: IGT)? The main difference is that Bally's and IGT are both
huge, established companies whereas Multimedia Games is a relatively small,
new company. Bally's and IGT have market caps of several billion whereas
Multimedia Games has a comparatively small $415 million market cap.
This means Multimedia Games has more room to grow. Since its launch in 1991,
Multimedia Games has expanded into different states and countries. While it
definitely has a larger market presence today, there are still many markets
that don't have Multimedia Games technology. Just by continuing to expand into
new markets, Multimedia can offer steady growth. The more established
competitors don't have this option.
While the future outlook for Multimedia Games seems glowing should the economy
stay strong, what if the economy tanks again? The management at Multimedia
Games seems to have learned from the past recession that it needs a buffer
against risk. The company has used its higher revenues to grow its cash
reserves to $74 million. At the same time, it has kept its total debt to a
comparatively manageable $33 million. Should the economy hit a rough patch,
Multimedia Games currently has enough of a cushion to get through it.
With increasing revenues, plenty of room for growth, and a low share price
compared to its competitors, Multimedia Games is a great stock pick for
investors expecting the economy and the casino industry to continue their
upward trend. Your odds with Multimedia Games are certainly a lot better than
at the craps or blackjack table.
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