On Tuesday, SHFL Entertainment (NASDAQ: SHFL ) will release its latest quarterly results. The company formerly known as Shuffle Master faces a huge opportunity in the rapidly evolving gaming market, but it will have to work hard to cash in.
SHFL Entertainment makes a variety of products that casinos use, ranging from its namesake Shuffle Master card-shuffling devices, to tracking devices designed to analyze table-game play and detect potential fraud. As the industry moves toward more electronic gaming, however, the company has also seen success in its electronic table systems and other related machines. Let's take an early look at what's been happening with SHFL Entertainment over the past quarter, and what we're likely to see in its quarterly report.
Stats on SHFL Entertainment
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Can SHFL shuffle up its earnings this quarter?
Analysts have gotten the slightest bit more pessimistic about SHFL's earnings prospects lately, cutting $0.01 per share from both their April quarter, and full fiscal-year estimates for the company. Yet, the stock has held up well, rising about 8% since late February.
SHFL's products have represented innovative moves forward for the casino industry. Its latest deck-shufflers and card-dealing devices actually recognize the cards they work with, detecting problems with decks, and enabling more sophisticated long-term analysis of dealing patterns. Moreover, by offering proprietary table games, like Ultimate Texas Hold'em, the company earns revenue while keeping table-game offerings fresh for casino clients.
But the huge potential for SHFL will come from the move toward online gaming. With New Jersey having set up a trial period for Internet gaming extending over the next 10 years, Atlantic City casino operators Caesars Entertainment and Boyd Gaming have both gotten a lot of interest, as investors salivate at the prospect of legal U.S. online gaming. Yet, SHFL has already gotten licenses to operate online gaming websites in Nevada. SHFL believes that it has already done a lot of the groundwork in setting up its i-Gaming business segment, but it acknowledges that it needs to start monetizing that work to generate revenue. Moreover, with rivals including International Game Technology and Bally Technologies having the same Nevada licenses, competition promises to be fierce in gaining a dominant online presence. With Boyd already having a relationship with the foreign company behind the once-popular Party Poker website, SHFL will have to look for ways to work with other casino operators to try to tie into their stronger brands.
In SHFL's report, watch for the mix of revenue across the company's profit centers to see where the company is doing most of its business. Although SHFL said ramping up the online segment won't fully take place until later in the year, you should still see some concrete efforts to capitalize on the hottest part of the gaming sector.
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