Light & Wonder, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Light & Wonder, Inc. (NASDAQ:LNW) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 5.4% to hit US$756m. Light & Wonder also reported a statutory profit of US$0.88, which was an impressive 35% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Light & Wonder

Taking into account the latest results, the consensus forecast from Light & Wonder's 16 analysts is for revenues of US$3.17b in 2024. This reflects an okay 6.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 63% to US$4.03. In the lead-up to this report, the analysts had been modelling revenues of US$3.13b and earnings per share (EPS) of US$3.73 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 was unchanged at US$106, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Light & Wonder, with the most bullish analyst valuing it at US$130 and the most bearish at US$76.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Light & Wonder shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Light & Wonder's past performance and to peers in the same industry. 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 2.0% 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 9.7% annually for the foreseeable future. Although Light & Wonder's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Light & Wonder following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Light & Wonder's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. 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..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Light & Wonder (1 is concerning!) that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.