Key Takeaways

Major acquisitions, new listings, and rapid digital expansion position Light & Wonder for outsized revenue and margin growth well beyond current market expectations.
Leadership in proprietary content and digital innovation enables strong market share gains and shareholder return acceleration as entertainment shifts to interactive, cross-platform experiences.
Exposure to regulatory, social, client concentration, digital execution, and market shift risks threatens Light & Wonder's revenue diversification, growth prospects, and earnings stability.

Catalysts

About Light & Wonder

Operates as a cross-platform games company in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Analyst consensus expects the Grover acquisition and charitable gaming expansion to diversify revenues and improve net margins, but this may significantly understate the scale of growth; with faster-than-expected organic adoption, untapped jurisdictions like Indiana coming online, and rapid pipeline buildout, Grover's business could drive far larger EBITDA and margin uplift than projected, underpinning sustainable double-digit recurring revenue growth.
Analysts broadly anticipate SciPlay's direct-to-consumer platform and enhanced digital content will increase engagement and revenues, yet this view may overlook the potential for accelerated market share gains as player migration away from unregulated sweepstakes gaming and continual regulation momentum combine with rapid scaling of first-party IP and direct monetization, suggesting material outperformance in both revenues and margin expansion.
The imminent move to a sole ASX listing not only promises improved liquidity and index inclusion but is likely to unlock substantial incremental demand from Australian superannuation and sovereign funds, driving sustained buy-side pressure, investor base broadening, and potentially compressing the equity risk premium, resulting in higher earnings multiples and lower cost of capital.
With widespread adoption of AI, data analytics, and personalized gaming, Light & Wonder's lead in omnichannel ownership of proprietary content and its fast-growing regionalized studios position the company to capture disproportionate share of incremental spending as consumer entertainment increasingly shifts towards interactive online and cross-platform experiences, supporting multi-year outperformance in top-line growth.
Ongoing transition to a capital-light, digital-first model and continual margin optimization-albeit underappreciated-combined with accelerated innovation cycles and higher success rates in game launches could drive EBITDA margins and free cash flow conversion well beyond current analyst estimates, providing meaningful upside leverage to earnings and supporting a potential step-change in shareholder returns through expanded buybacks.

Light & Wonder Earnings and Revenue Growth

Light & Wonder Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Light & Wonder compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Light & Wonder's revenue will grow by 10.9% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 10.9% today to 19.1% in 3 years time.
The bullish analysts expect earnings to reach $830.1 million (and earnings per share of $11.04) by about August 2028, up from $349.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 16.5x on those 2028 earnings, down from 21.2x today. This future PE is lower than the current PE for the US Hospitality industry at 22.9x.
Analysts expect the number of shares outstanding to decline by 5.38% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.25%, as per the Simply Wall St company report.

Light & Wonder Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heightened regulatory scrutiny and the risk of new gambling-related legislation or restrictions, especially in international or U.S. state markets, could constrain Light & Wonder's ability to expand geographically or diversify product offerings, resulting in elevated compliance costs and potential downward pressure on future revenues and margins.
Ongoing societal and governmental concerns about gambling addiction, alongside possible new restrictions on social or online gaming, may reduce participation rates or lead to unfavorable public sentiment, putting long-term dampening effects on net earnings and top-line growth.
Light & Wonder's heavy reliance on a limited pool of large casino operator customers subjects it to concentration risk, where client consolidation, renegotiation, or decreased capital expenditure (such as periods of operator apprehension or delayed slot purchasing described in the call) could directly impact recurring revenue and earnings stability.
Despite initial traction, significant challenges exist in executing growth and integration plans in digital and iGaming segments as competition intensifies from digital-native rivals-failure to successfully scale proprietary content or capture new online pools could stunt efforts to diversify revenues and compress margins over time.
The ongoing shift toward online/mobile entertainment and away from traditional physical casino experiences, compounded by macroeconomic uncertainty and cyclical declines in consumer discretionary spending, threatens demand for Light & Wonder's land-based products and participation fees, endangering both near-term sales growth and long-term operating margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bullish price target for Light & Wonder is $144.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Light & Wonder's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $144.0, and the most bearish reporting a price target of just $80.0.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $4.4 billion, earnings will come to $830.1 million, and it would be trading on a PE ratio of 16.5x, assuming you use a discount rate of 10.3%.
Given the current share price of $88.12, the bullish analyst price target of $144.0 is 38.8% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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