| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 130.07 | 46 |
| Intrinsic value (DCF) | 6.14 | -93 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 66.08 | -26 |
Light & Wonder, Inc. (NASDAQ: LNW) is a global leader in technology-based gaming products and services, serving the casino, lottery, and digital gaming industries. Headquartered in Las Vegas, Nevada, the company operates across three key segments: Gaming, SciPlay (social gaming), and iGaming (real-money digital gaming). Its Gaming segment provides casino operators with cutting-edge slot machines, electronic table systems, and casino management solutions, while SciPlay develops engaging free-to-play mobile and web-based games. The iGaming division offers a robust platform for real-money digital gaming, including proprietary content and Open Platform System tools for operators. With a diversified revenue model spanning hardware sales, software licensing, and recurring digital monetization, Light & Wonder is strategically positioned in the high-growth interactive gaming sector. The company’s 2023 financials reflect strong execution, with $3.19B in revenue and $336M net income, underscoring its relevance in the $100B+ global gaming market. As jurisdictions worldwide expand regulated gaming, LNW’s cross-platform content library and land-based/digital integration provide a unique competitive edge.
Light & Wonder presents an attractive play on the convergence of land-based and digital gaming, with diversified exposure to high-margin recurring revenue streams (40% of total revenue from digital). The company’s 1.295 beta indicates moderate sensitivity to economic cycles, offset by structural growth in regulated iGaming markets. Key strengths include $632M operating cash flow (19.8% margin) supporting deleveraging (net debt/EBITDA of 3.2x) and $196M cash position. Risks include exposure to cyclical casino capex (45% of Gaming revenue from machine sales) and intense competition in social gaming. The zero dividend policy reflects reinvestment priorities in content development and M&A. Valuation at 12.5x EV/EBITDA appears reasonable given projected 8-10% organic growth in iGaming and potential for margin expansion as digital mix increases.
Light & Wonder competes through vertical integration—combining proprietary game design (6,000+ titles), hardware manufacturing, and cross-platform distribution. In Gaming, its 25% US slot machine market share trails Aristocrat (30%) but leads in multi-level progressive systems. The Open Platform System differentiates in iGaming by allowing operators to mix LNW content with third-party games, unlike closed ecosystems from Evolution. SciPlay’s monetization ($3.20 ARPDAU) outperforms casual gaming peers but lags social casino leaders like Playtika. Key advantages include: 1) Land-based/digital content synergy (70% of top-performing casino games have digital analogs); 2) Recurring revenue from 150,000+ connected gaming devices; and 3) Regulatory expertise across 50 jurisdictions. However, the company faces pressure from pure-play digital rivals with lower cost structures and must continually refresh its game portfolio (25% annual turnover) to maintain floor share. The 2023 acquisition of SciPlay minority interests improves profitability but increases exposure to the hyper-competitive mobile gaming space.