Research on the Viability of Investing in Scientific Games Inc. Stock

This report investigates the investment viability of Scientific Games Inc. (SGMS) stock. It begins with an introduction highlighting the importance of stock analysis for investors and provides a company profile, detailing its global operations and market position. The report identifies the hypothesis that SGMS is a good investment due to its potential returns. A literature review examines market trends, expert opinions, and factors influencing stock performance, including casino installations, contract wins, acquisitions, and innovative products. Financial ratios, such as net profit margin, are analyzed to assess the company's financial health. The report concludes by summarizing the key findings and providing insights for potential investors, supported by data and research from various sources. The report aims to provide a comprehensive understanding of SGMS's investment potential.

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Research On The Viability Of Investing In Scientific Games Inc. Stock
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Research on the Viability of Investing in Scientific Games Inc. Stock
Introduction
The company stock in the market has been the choice of many investors who are willing
to buy the stock in the market. It has left many analysts willing to conduct more research on the
viability of the stock and the level of the returns which the stock promises in the market. As part
of this research, our main area of the concern will be to analyze the stock performance in the
market and advise whether it's a viable venture for the investors. Beside that, we shall also
consider the brief overview of stock in the past few years to consider whether the stock
performance.
Everyday investors, regulators, and portfolio managers are expected to make a key
decision which relates to stock which is being sold in the market. To make such a decision, it
would require these investors to conduct a valuation on asset value, which will be based on the
values which are perceived to be related to investment. Also, there is a need to conduct a key
comparison of the stock performance in the market with other related shares to decide as to
whether the stock is more viable in the market. In the course of the paper, we shall identify the
hypothesis of the paper, then conduct the literature review to include what other researchers have
said about the topic and then make a conclusion on the viability of the stock in the market.
Company profile
Scientific Games Inc. is American based firm which offers all the betting products and
other vital services to gambling organizations and lottery across the globe. It's a publicly-traded
firm with its main office based in Las Vegas in the United States ("About Us", 2020). As a
global leader in the lottery industry, the firm records annual revenue of more than $ 3 billion

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which has enabled the company to boost its operation in other countries which they haven’t
opened its services. The company stock trade in NASADQ with its ticker symbol as SGMS.
Identifying the hypothesis
Scientific Games Inc. stock is a good stock investment in the market due to the level of
the return which the stock promises to investors. It's a viable investment opportunity which every
other investor in the market should consider investing his money. Currently, the share is trading
at 9.05, and there is a great possibility for the shares to increase the market value in the coming
days.
Literature Review
According to market watch SGMS has been standing out very strong in the market in the
dominated industry and making the stock more viable in the market. It has been the choice of
many investors in the market since the security is in the computer- services which investors
consider them as solid earnings. It is an important fact which has been working effectively for
the company and therefore making its share perform well in the market as compared to other
stock. For instance, according to Zack Industry Rank, the stock is ranked at 34 out of more than
250 industries which makes the stock to stand out very strong and more positioned for some
investors to make huge returns after investing in the share in the market ("Scientific Games
Corp.", 2020). Any share is compared with other key segments in the market, and this would
help the investors make all the comparison which is the best share in the market. All the portfolio
managers, on the other hand, are expected to conduct all due diligence and stock history analysis
before they could recommend to the investors. Additionally, more analysis on the stock indicates

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that the company have been making a great decision which gets aimed at making the stock to be
more favourable in the market. For instance, in the past three years, consecutive the company
earning has been steady, which allows the investor to project that the earnings will be more in the
coming years. Few months, ' analysts have considered the stock to be bullish in the market due to
the prospects which are attributed to sharing each day when it is trading in Nasdaq.
The market projection on the Scientific Games corporation prices is relatively high, with
many analysts considering that the stock is going to be performing better in the market compared
to any other stock. As investors, this is the best time when you can buy the stock in the market as
you speculate in the market (Biktimirov & Xu, 2019). If the price could rise in the market, there
is a clear projection that there will be high return in the market as compared to when you wait for
the price to rise and buy the shares during that period. As an investor, it’s good to act on the
available information, and this would increase the chance of earning more.
On separate article Zacks Equity Research continues to highlight to the investors on
why they should have the stock on their portfolio due to the benefits which come with the
stock due to the acquisition strategies and also innovative line of product of the firm
(Biktimirov & Xu, 2019). Currently, the earning per share for the company has been
growing at a rate of 10%, which is an indication that there is a good prospect in the firm.
It's a stock which every other investor who has committed his fund in the stocks investors
should consider at all given time to maximize returns.
According to Khan and Tajnin (2018), there are key objectives which should get
adhered when someone wants to invest to ensure there is the viability of the venture in
the market. For instance, each of the investors wants to get more return in the market
after investing, and therefore they should consider the stock which promises a higher

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return in the market. However, what the investor should also learn is that the more the
profit, the higher the risk of the investment and therefore an investor should be willing to
invest more if they want to make more profit in the long run (Khan & Tajnin, 2018). In this
case, if an investor is willing to invest in the scientific Games stock, then he should be
willing to bear the risk which comes with the stock. The authors tried to highlights
investment objectives which an investor should commit to any venture to ensure they get
a higher return in the market. In consideration of these factors, it would help an investor
makes a key decision which relates to viable ventures.
According to Stephan, (2018) once an investor settles on the investment which they are
supposed to make it would then proceed for the investor to choose the most viable investment
strategy which best suits the investor. There are different strategies which are available for the
investors, and it would need the investor to analyze the venture and decide which is the most
viable strategy which the business can always adopt in the market. For instance, investors can
make use of Sharpe. Jensen strategies which are all aimed at assisting the investor in making a
key decision in the market (Stephan, 2018). For example, an investor who wants to invest in the
SGMS should adopt all other strategies which would help them make all the relevant decision
which relates to the investment portfolio. All these techniques which are adopted by the investor
will help to identify the risk which is associated with the business and also the return which is
expected to generate after the venture.
Factors influencing Stock performance in the market
Increased installation of casinos

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There has been a rise in several casinos in countries which the company has
operations which increase chances of company growth in the market. Most of these
casinos are placed in key areas which include capital city which makes them more
strategic and therefore increases in the level of the revenue which is generated by the firm
("Corporate Profile", 2020). There are some areas where the firm is operating on a
monopoly basis, and this has been significant to the firm. Each investor is concerned with
a firm which has good prospects in the market.
Contract wins
It’s another key factor which contributes to the improved performance in the
market is the contract wins which the firm has been recording in the market. It's a major
driving force in the market which has enabled the firm to enjoy higher ranking in the
market. For instance, in the recent past, the company announced about the Washington
Lottery, which will continue to avail its offering which includes games licensed brands,
and other services in the market (Batra, 2017). Scientific Games has been in existence for
many years, and they have designed their products and services to meets the demand of
the various customers in the market and therefore making their games more fascinating.
The recent Washington Lottery will continue till March 2024, which is good to enhance
loyalty for the brand. All these contracts which have been made by the company have
boosted its share price, which has been acting on the benefits of the firm in the market.
Company acquisitions
The company has been making several acquisitions in the past five years, which
have contributed to the top line in the company. For instance, the corporation has made

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three successful buyouts within a short period which has enhanced the growth of the
corporation in the market in a more significant manner. The buyouts include EsysnetG,
NYX Gaming Group, and Tech Art which had added synergy to the corporation in a more
meaningful manner (Alquraan, Alqisie, & Shorafa, 2016). As results of these acquisitions
which has been made, it has enabled the company to broaden its product line in the online
lottery and digital gaming. Most of the investors in the market will be more interested in
the acquisitions which the firm is making in the market because they help to create more
synergy and boost the price of the stock.
Innovative product portfolio
Scientific Games Corporation has been incorporating innovative products in the
market which have been accepted in the local and international market, which boost
productivity in the market. These innovative products have enabled the firm to stretch
more in the market and ensure there is a good financial performance in the market (Joshi
& Bayra, 2017). In the recent past, the revenue increase in the company has been attributed
to the innovative product which is competing effectively in the international market.
Given the above factors in consideration, they make the stock for the company to
be more preferred as compared to any other stock in the market. Most of the investors
who are looking for the stocks to invest in the company will only be interested in
analyzing all the key driving forces which could enable the firm to be viable investment
opportunity in the market (Younas & Mehmood, 2018). In addition to that, the company
share could also work effectively with any combination of the stock and create a good
portfolio for an investor to invest.

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Financial Ratios
Financial ratios are important tools which could be used by investors to analyze the
viability and the performance of the stock in the market. Here are the important key ratios which
could help demonstrate the performance of the firm.
Net profit margin
The net profits margin is the percentage of the profits which is generated by the company
at the end of the company’s operations. It’s used by the investor to determine the firm
performance in the market at any given period (Finance, 2020). If the percentage is relatively
higher, it shows that the firm is making more profit as compared to when the ratio is relatively
lower
Net profit margin= Net profit/ Revenue* 100
In the year 2019
= 130,000/3400000*100
= 3.8%
In the year 2018
352400/3363000*100
= 10.4%
According to the percentages which are presented above, it indicates that the corporation
has been making a significant profit in the past two years, which get attributed to the initiative
which the firm is undertaking.

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Return on Equity
ROE is one of the ratios which are used by an investor to know how much profit can the
company generate from the capital which is invested (Finance, 2020). For each dollar which is
invested by an investor, there is a portion which will be realized as profit.
ROE= Net Income/ Shareholders Equity
In the year 2019
= 130,000/2212000
= 0.0587
In the year 2018
352400/2463000
= 0.14
In the year 2019 and 2018, the ROE is relative good which is an indication that the
investor will get a good portion of the income they have invested in the firm(Finance, 2020). It's
worth investing in the company as the return is relatively good in the market.
Return on Asset
ROA is beneficial to the investor since it helps to know the return which one can
generate from the assets which have been invested in the firm(Finance, 2020). For each of the
asset which you invest in the corporation, there is a portion which you are supposed to get as
returns.
ROA= Net Income/ Total average asset

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In the year 2019
= 130,000/7809000
= 0.0167
In the year 2018
352400/7717800
= 0.04567
Dividend Yield
The dividend yield refers to the amount of the money which the company is expected to
pay to its shareholders within one year for owning the share of its stock(Finance, 2020). As a
shareholder, you will be interested to know the amount of the dividend yield for the company at
the end of each trading year.
Dividend yield= Most recent dividend/ current share price
In the year 2019
= 0.92/14.15
Divided yield = 6.5%
In the year 2018
1.45/20
7.25%

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The dividend yield in the company is a relative good, and the shareholders will make
more money after investing in the company.
According to the financial ratios of the company, there is a clear indication that the firm
has been promising good return in the market and therefore making it viable investment
opportunity for any investor (Finance, 2020). Many speculative investors in the market are
looking to invests in all the stock which promises any return in the market and therefore making
this investment more viable in the market.
Conclusion
Investing in Scientific Games is a viable investment for the investor due to the level of
the output which the company promises to their investors in the market. Company has adopted
key driving forces which enables the firm to boost the marketability of its stock in the market
and therefore to increase the chance for the more investment. For instance, there are several
acquisitions which have been made by a firm which boost its market share and increase the
synergy, which is adopted by the firm. Also to note is the innovative product which the firm has
which are selling well in the local market and also the international market. As an investor, these
are the factors which put into consideration for you to decide on whether the stock as a good
investment. Consequently, owing to the research which has been conducted by other researchers,
it's clear that these factors have favoured the company stock in the market.
On the other hand, from the research which we have conducted to support the
hypothesis its elaborate that there are opportunities which surround the investment as the firm
stretch to boost the return on its shares. For instance, there has been an increase in the revenue
which the firm generates in the market, and this is a key aspect in the company. However, it's

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important to note the more the return in the market the riskier the stock in the market and
investor should be willing to take the risk. Something important to also note from the research is
that there are some key considerations which should be made by an investor when looking for
the investment opportunity includes the return in market and also nature of operations which firm
is undertaking. For instance, scientific games stocks are more viable in the market since the firm
has invested in an industry which is very competitive. There are other key areas of the research
which could be researched on which include investment decisions which investors should
consider in the market to ensure the venture which they choose are more viable.