The Mystic Gambler

Shares of PlayAGS (NYSE: AGS) are up 30.37% year-to-date, good for one of the better showings among small-cap gaming equities. Some analysts believe the slot machine manufacturer has more upside ahead of it.

In a note to clients earlier this week, B. Riley analyst David Bain reiterated a “buy” rating and $14 price target on the stock, implying shares of the Las Vegas-based company can more than double from today’s close at $6.70. He forecasts another earnings beat by PlayAGS, which reports on reports on Aug. 3, noting the company is likely gaining market share.

We expect 2Q free cash flow results should also provide net leverage reduction transparency to 3.5x or lower by December this year,” noted Bain. “Overall, we believe AGS has visible product and process momentum for slot industry outperformance over the next 12 months while its EV/EBITDA remains well-below peer and historical averages.”

PlayAGS has topped Wall Street’s earnings before interest, taxes, depreciation and amortization (EBITDA) estimates in 12 consecutive quarters.

PlayAGS Catalyst-Rich Story

Sell-side analysts believe PlayAGS started the second quarter on a strong note, and that the company has solid two- to three-month visibility in terms of client purchasing trends. Wall Street expects the firm to notch high single-digit sales growth this year.

“We believe product category expansion, such as AGS’ high denomination offering, is also contributing to market share gains. For both recur and sales, we note improvements in overall process in tandem with product momentum. For instance, AGS now has 25 salesmen versus 13 in 2019,” added Bain.

By some estimates, recurring revenue and domestically installed slots account for about 70% of the PlayAGS business model.

PlayAGS Undervalued, Financial Position Improving

Relative to its peer group, PlayAGS is discounted and that could be a source of appeal for some investors at a time when the company is firming its financial position. Earlier this year, the firm revealed plans to lower leverage to a range of 3.25x to 3.75x, drawing praise from Wall Street.

The second-quarter earnings update could be an opportunity for management to provide insight into the deleveraging efforts. Should that happen and the news is well-received, that could potentially facilitated more upside for the already hot stock.

“We estimate 2Q will show a significant Q/Q inflection to positive free cash flow and believe AGS will again cite CY23E net leverage ending between 3.25x and 3.75x, though the mid- to high end of the net debt guidance range is emerging as conservative, in our view,” concluded Bain.

The post PlayAGS Could Be Potent Play on Slot Machine Boom appeared first on Casino.org.

Rephrased by The Mystic Gambler

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Empire Technological Group, which does business as Play Synergy, announced today that it is acquiring the US slot machine operations of Aruze Gaming.

In February, Aruze filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the State of Nevada. Last week, the company announced it is shuttering its Las Vegas office, laying off 100 workers as part of that process.

The company’s lone shareholder is Japanese businessman Kazuo Okada and its US clients include brick-and-mortar and internet casino operators.

With acquisition, Play Synergy is assuming “responsibility for, the related sales, service, support, and operations of Aruze’s slot route and operations.”

Play Synergy May Save Some Aruze Las Vegas Jobs

As noted above, Aruze announced last week that it plans to eliminate 100 jobs at its Las Vegas headquarters, but it’s possible some of those roles may be saved.

Aruze, Play Synergy, and all other stakeholders in the process have worked exceptionally well together to provide the vast majority of Aruze team members with new employment opportunities,” said Play Synergy President Frank Feng in the statement. “This along with interest from others in the industry has had the result of minimizing the disruption to those impacted and their families.”

Play Synergy didn’t mention how many of those 100 jobs, if any, could be saved. The buyer of the Aruze US slot operations also highlighted a commitment to the seller’s customers, noting it expects a smooth transition.

“Play Synergy understands that this process can be unsettling to Aruze’s current customer base and wants to reassure each of them that our team, including those that will be joining us from Aruze, are committed to a smooth transition along with a focus on excellence in customer service,” according to the statement.

Play Synergy Story

Play Synergy has three primary divisions – slot machines, table games and technology. The company’s gaming machines include the Lucky and  Penny series of slots as well as electronic keno and poker offerings. It’s table games include variations of baccarat, blackjack and poker.

“We started in the table game business and have developed a collection of market-proven winners, including our flagship table game Golden Frog Baccarat,” according to the company.

Play Synergy’s SMRT Choice table game technology provides casino operators with live player analytics and can be customized across various iterations of baccarat, blackjack and poker.

The post Play Synergy to Acquire Aruze Gaming Slot Machine Business appeared first on Casino.org.

Rephrased by The Mystic Gambler

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