PlayAGS (AGS) Reports Third Quarter Loss, Top Revenue Estimates

PlayAGS (AGS) came out with quarterly loss of $0.16 per share versus the Zacks Consensus Estimate of $0.03. For comparison, a year earlier earnings per share were $0.12. These numbers have been adjusted for one-off items.

This quarterly report represents an earnings surprise of -633.33%. A quarter ago, it was expected that this gaming supplier would post earnings of $0.16 per share when it actually produced a loss of $0.07, delivering a surprise of -143.75%.

The company has failed to beat consensus EPS estimates over the last four quarters.

PlayAGS, which belongs to the Zacks Gaming industry, posted revenues of $79.38 million for the quarter ended September 2019, surpassing the Zacks Consensus Estimate by 1.50%. For comparison, revenues from a year ago amounted to $75.53 million. The company has topped consensus revenue estimates twice over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

PlayAGS shares have lost approximately 46.1% since the beginning of the year compared to the S&P 500’s increase of 22.7%.

What’s next for PlayAGS?

While PlayAGS has underperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to the earnings release, PlayAGS estimate revision trends were mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.07 on revenue of $81.76 million for the coming quarter and -$0.15 on revenue of $307.52 million for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Gaming is currently in the bottom 15% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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