The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Accel Entertainment (NYSE:ACEL) and the rest of the gaming solutions stocks fared in Q2.
Gaming solution companies operate in a dynamic and evolving market, and the digital transformation of the gaming industry presents significant opportunities for innovation and growth, whether it be immersive slot machine terminals or mobile sports betting. However, the gaming solution industry is not without its challenges. Regulatory compliance is a crucial consideration as companies must navigate a complex and often fragmented regulatory landscape across different jurisdictions. Changes in regulations can impact product offerings, operational practices, and market access, requiring companies to maintain flexibility and adaptability in their business strategies. Additionally, the competitive nature of the industry necessitates continuous investment in research and development to stay ahead of competitors and meet evolving consumer demands.
The 7 gaming solutions stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.4%.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
In light of this news, gaming solutions stocks have held steady with share prices up 2% on average since the latest earnings results.
Accel Entertainment (NYSE:ACEL)
Established in Illinois, Accel Entertainment (NYSE:ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Accel Entertainment reported revenues of $309.4 million, up 5.7% year on year. This print exceeded analysts’ expectations by 2.7%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ earnings estimates but a miss of analysts’ operating margin estimates.
Accel CEO Andy Rubenstein commented, “I am happy to report that we delivered another record-setting quarter, continuing to demonstrate the strength of our local, convenience-based gaming model.”
Accel Entertainment Total Revenue
Interestingly, the stock is up 3.4% since reporting and currently trades at $11.46.
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE:RSI) is an operator of digital gaming platforms.
Rush Street Interactive reported revenues of $220.4 million, up 33.5% year on year, outperforming analysts’ expectations by 9.4%. The business had an incredible quarter with an impressive beat of analysts’ earnings and operating margin estimates.
Rush Street Interactive Total Revenue
Rush Street Interactive pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 15.1% since reporting. It currently trades at $11.50.
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games.
PlayStudios reported revenues of $72.59 million, down 6.7% year on year, falling short of analysts’ expectations by 2.6%. Still, it was a a satisfactory quarter as it posted an impressive beat of analysts’ operating margin estimates.
PlayStudios delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 13.6 million monthly active users, down 2% year on year. As expected, the stock is down 24.1% since the results and currently trades at $1.48.
Specializing in digital casino gaming, Inspired (NASDAQ:INSE) is a provider of gaming hardware, virtual sports platforms, and server-based gaming systems.
Inspired reported revenues of $75.6 million, down 4.8% year on year. This print surpassed analysts’ expectations by 1.7%. However, it was a slower quarter as it produced a miss of analysts’ earnings estimates.
The stock is up 14.7% since reporting and currently trades at $9.06.
Getting its start in daily fantasy sports, DraftKings (NASDAQ:DKNG) is a digital sports entertainment and gaming company.
DraftKings reported revenues of $1.10 billion, up 26.2% year on year. This number was in line with analysts’ expectations. Overall, it was a very strong quarter as it also recorded an impressive beat of analysts’ operating margin estimates and full-year revenue guidance exceeding analysts’ expectations.
DraftKings achieved the highest full-year guidance raise among its peers. The stock is up 8.3% since reporting and currently trades at $38.45.
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