Shareholders of Light & Wonder, Inc. (NASDAQ:LNW) will be pleased this week, given that the stock price is up 10% to US$101 following its latest full-year results. Light & Wonder reported in line with analyst predictions, delivering revenues of US$2.9b and statutory earnings per share of US$1.75, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Light & Wonder's 15 analysts are now forecasting revenues of US$3.13b in 2024. This would be a reasonable 8.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 102% to US$3.66. Before this earnings report, the analysts had been forecasting revenues of US$3.10b and earnings per share (EPS) of US$3.54 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 21% to US$114, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Light & Wonder, with the most bullish analyst valuing it at US$190 and the most bearish at US$76.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Light & Wonder is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.0% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.7% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.5% annually. So it looks like Light & Wonder is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Light & Wonder's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Light & Wonder going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Light & Wonder (1 is a bit unpleasant) you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.