Everi Holdings Inc. (EVRI) in Las Vegas develops entertaining game content and gaming machines, gaming systems, and services for both land-based and online gambling operators.
The company is a leading and comprehensive provider of trusted financial technology solutions that power casinos while boosting operating efficiencies and meeting regulatory compliance standards.
The stock has gained 45.9% in price over the past year, demonstrating the company’s strategic emphasis on creating recurring revenues and ongoing investment in developing new and improved solutions that assist its clients in increasing revenue and managing their businesses more effectively.
Here's what could shape EVRI's performance in the near term:
Strategic Acquisition
Last month, EVRI agreed to acquire ecash Holdings Pty Ltd., a privately held, Australia-based developer and provider of innovative cash handling and financial payment solutions for the gaming industry in Australia, Asia, Europe, and the United States. With this, EVRI will gain a complementary portfolio of additional client locations in Australia, the United States, and other geographies.
In January, EVRI agreed to acquire certain strategic assets of Atlas Gaming Pty Ltd and Atlas Gaming Technologies Pty Ltd, an Australia-based producer and distributor of proprietary gaming content and products. These assets include game development technology and intellectual property. The Atlas assets complement EVRI's current game development studios and game portfolio while also paving the road for future international expansion.
Robust Financials
During the fourth quarter, ended Dec. 31, 2021, EVRI's total revenue increased 50.9% year-over-year to $180.39 million. Its operating income increased 179.1% year-over-year to $47.86 million. The company's net income has grown significantly from its year-ago value to $89.43 million, while its EPS came in at $0.88.
Strong Profitability
EVRI's 23.2% trailing-12-months net income margin is 246.8% higher than the 6.7% industry average. Also, its ROC, gross profit margin and ROA are 33.5%, 130%, and 52.9% higher than the respective industry averages. Furthermore, its $391.63 million cash from operations is 133.1% higher than the $168 million industry average.
Consensus Rating and Price Target Indicate Potential Upside
Each of the three Wall Street analysts who rated EVRI rated it Buy. The 12-month median price target of $30 indicates a 32.6% potential upside. The price targets range from a low of $28.00 to a high of $32.00.
POWR Ratings Reflect Solid Prospects
EVRI has an overall B grade, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. EVRI has an A grade for Quality and a B for Sentiment. EVRI's solid earnings and robust profitability are consistent with the Quality grade. In addition, favorable analysts' price targets and ratings are in sync with the Sentiment grade.
Among the 112 stocks in the D-rated Financial Services (Enterprise) industry, EVRI is ranked #4.
Beyond what I stated above, we have graded EVRI for Growth, Value, Stability, and Momentum. Get all EVRI ratings here.
Bottom Line
EVRI has exhibited strong top-line and bottom-line performance in its last reported quarter and is on track to deliver solid growth in the coming months based on its diversified strategies. In addition, given the favorable analysts' estimates and price target, and its fundamental strength, the stock could soar in price in the near term. So, we think the stock could be a great bet now.
How Does Everi Holdings Inc. (EVRI) Stack Up Against its Peers?
EVRI has an overall POWR Rating of B, which equates to a Buy rating. Check out these other stocks within the same industry with A (Strong Buy) ratings: Forrester Research Inc. (FORR), CPI Card Group Inc. (PMTS), and Consumer Portfolio Services Inc. (CPSS).
EVRI shares were unchanged in premarket trading Friday. Year-to-date, EVRI has gained 5.95%, versus a -8.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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