2 Small-Cap Gaming Stocks With Double-Digit Growth

Playtika Holding Corp (NASDAQ:PLTK) is an Israel-based mobile gaming company with four lucrative revenue streams. The company just reported its Q1 results and the company posted double-digit gains in all of them. On the top line, the company’s revenue grew nearly 20% to $638.9 million or roughly 1000 basis points better than expected. The company’s strongest segments are Solitaire Grand Harvest and Board Kings which grew 60% and 57% respectively. The other segments of note, Bingo Blitz and Casual Games grew by 40% and 30% to help drive a 39% increase in adjusted income. Share prices are down, however, because GAAP earnings missed the consensus estimate.

Looking forward, the company is expecting the strength to continue and guided full-year 2021 outlook higher because of it. The new guidance is not only above the previous guidance but also the analyst’s consensus and we feel it may be too low. After sampling Solitaire Grand Harvest our gamers say they’ll probably play it again. It may take a little time for the market to come back around but this stock should see a new all-time high by the end of the fiscal year.

International Game Technology PLC (NYSE:IGT) is a horse of a different color, operating as a Lottery and gaming services business. The lottery end of the business is carrying the company right now, up 48% YOY, but we expect to see gaming rebound smartly by the end of the year. The gaming segment, which services the casino and sports betting industry, saw its revenue decline by 14% YOY but far less than the analysts were expecting. In total, the company earned $1.01 billion in the first quarter or up 24% over last year and fully 1500 basis points better than the consensus.

The revenue strength was felt all the way through to the bottom line as well. Margins not only improved but nearly doubled to drive a solid beat on the bottom line. The GAAP $0.44 in earnings beat the consensus by $0.51 and reversed an expected loss. The money is being put to good use paying down debt and improving balance sheet leverage which is another plus for this business. At the end of the Q1 period debt was down a quarter billion to just over $7.0 billion with leverage down a full multiple to 5.4X earnings.

Shares of IGT surged more than 16% on the news to set a new 3-year high. The move is accompanied by strong signals in the indicators on both the daily and weekly charts. The indicators signals suggest a strong shift in momentum is in process and it is one that has room to run. In our view, this stock could easily be retesting the 2018 high near $30 by the end of the calendar year.

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