Stock of the day: Light & Wonder

(AI video summary)

This video was created on 8 May 2025 for IG audiences by ausbiz.

ASX code: LNW

Light & Wonder's mixed quarterly results

Light & Wonder, a cross-platform gaming company, reported mixed first-quarter (Q1) 2025 results.

• Revenue: $774 million, falling short of the $806 million analyst estimate
• Adjusted net profit after tax (NPAT): rose by 11% year-on-year (YoY) to $117 million

Shares fell in United States (US) trading due to near-term cost pressures linked to potential Trump trade policies. However, management is confident that efficiency measures will mitigate these issues.

Market position against industry leader

Analysts are split on Light & Wonder's investment potential compared to industry leader Aristocrat Leisure. Many see market leaders as preferable investments, but Light & Wonder shows potential in Australia, with plans to introduce successful gaming titles in the US within 12 - 18 months.

Strategic hires, including former Aristocrat executives, strengthen Light & Wonder's competitive position. Led by Matt Wilson, formerly of Aristocrat, the company has recruited Aristocrat’s chief technology officer (CTO), signalling a strategy to challenge the market leader.

Valuation and investment outlook

Light & Wonder's price-to-earnings (P/E) ratio is under 15, appealing to some analysts given its growth streak. Others attribute its lower valuation to higher debt compared to Aristocrat. The company aims for earnings before tax (EBIT) of $1.4 billion by 2025.

Analyst opinions vary; some rate it a ‘hold,’ citing fair valuation, while others consider it a ‘buy’ alongside Aristocrat. For those seeking gaming sector exposure, maintaining a primary position in Aristocrat and adding Light & Wonder as a secondary position is suggested.