We assign a fundamental rating of 6 out of 10 to LNW. LNW was compared to 132 industry peers in the Hotels, Restaurants & Leisure industry. While LNW has a great profitability rating, there are some minor concerns on its financial health. LNW may be a bit undervalued, certainly considering the very reasonable score on growth These ratings could make LNW a good candidate for value investing.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year LNW was profitable.
LNW had a positive operating cash flow in the past year.
Of the past 5 years LNW 4 years were profitable.
LNW had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

The Return On Assets of LNW (6.13%) is better than 72.93% of its industry peers.
LNW has a Return On Equity of 55.19%. This is amongst the best in the industry. LNW outperforms 90.98% of its industry peers.
LNW's Return On Invested Capital of 11.81% is fine compared to the rest of the industry. LNW outperforms 76.69% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LNW is in line with the industry average of 10.36%.
The 3 year average ROIC (10.25%) for LNW is below the current ROIC(11.81%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	6.13%
ROE	55.19%
ROIC	11.81%

ROA(3y)23.43%

ROA(5y)13.57%

ROE(3y)148.45%

ROE(5y)N/A

ROIC(3y)10.25%

ROIC(5y)N/A

1.3 Margins

Looking at the Profit Margin, with a value of 12.39%, LNW belongs to the top of the industry, outperforming 80.45% of the companies in the same industry.
LNW's Profit Margin has declined in the last couple of years.
The Operating Margin of LNW (25.77%) is better than 90.23% of its industry peers.
LNW's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 72.74%, LNW belongs to the top of the industry, outperforming 88.72% of the companies in the same industry.
In the last couple of years the Gross Margin of LNW has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	25.77%
PM (TTM)	12.39%
GM	72.74%

OM growth 3Y22.93%

OM growth 5Y12.62%

PM growth 3Y-15.12%

PM growth 5YN/A

GM growth 3Y-0.43%

GM growth 5Y0.59%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

LNW has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
LNW has less shares outstanding than it did 1 year ago.
LNW has less shares outstanding than it did 5 years ago.
LNW has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.08 indicates that LNW is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.08, LNW is doing good in the industry, outperforming 60.15% of the companies in the same industry.
The Debt to FCF ratio of LNW is 12.70, which is on the high side as it means it would take LNW, 12.70 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 12.70, LNW is in line with its industry, outperforming 53.38% of the companies in the same industry.
LNW has a Debt/Equity ratio of 6.77. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 6.77, LNW is not doing good in the industry: 63.91% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Debt/Equity	6.77
Debt/FCF	12.7
Altman-Z	2.08

ROIC/WACC1.41

WACC8.38%

2.3 Liquidity

A Current Ratio of 2.13 indicates that LNW has no problem at all paying its short term obligations.
LNW has a better Current ratio (2.13) than 89.47% of its industry peers.
A Quick Ratio of 1.85 indicates that LNW should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.85, LNW belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	2.13
Quick Ratio	1.85

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

LNW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 42.55%, which is quite impressive.
LNW shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.53% yearly.
LNW shows a small growth in Revenue. In the last year, the Revenue has grown by 1.87%.
The Revenue has been growing slightly by 5.95% on average over the past years.

EPS 1Y (TTM)42.55%

EPS 3Y5.53%

EPS 5YN/A

EPS Q2Q%88.73%

Revenue 1Y (TTM)1.87%

Revenue growth 3Y13.98%

Revenue growth 5Y5.95%

Sales Q2Q%2.94%

3.2 Future

LNW is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 21.44% yearly.
Based on estimates for the next years, LNW will show a small growth in Revenue. The Revenue will grow by 5.29% on average per year.

EPS Next Y52.71%

EPS Next 2Y38.2%

EPS Next 3Y33.93%

EPS Next 5Y21.44%

Revenue Next Year6.25%

Revenue Next 2Y6.93%

Revenue Next 3Y6.52%

Revenue Next 5Y5.29%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.

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4. Valuation

4.1 Price/Earnings Ratio

LNW is valuated rather expensively with a Price/Earnings ratio of 18.78.
Compared to the rest of the industry, the Price/Earnings ratio of LNW indicates a somewhat cheap valuation: LNW is cheaper than 69.17% of the companies listed in the same industry.
LNW is valuated rather cheaply when we compare the Price/Earnings ratio to 27.25, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 12.23, which indicates a correct valuation of LNW.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LNW indicates a somewhat cheap valuation: LNW is cheaper than 79.70% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of LNW to the average of the S&P500 Index (25.98), we can say LNW is valued rather cheaply.

		Industry Rank	Sector Rank
PE	18.78
Fwd PE	12.23

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of LNW indicates a somewhat cheap valuation: LNW is cheaper than 63.16% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, LNW is valued a bit cheaper than the industry average as 73.68% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	18.61
EV/EBITDA	10.03

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
LNW has a very decent profitability rating, which may justify a higher PE ratio.
LNW's earnings are expected to grow with 33.93% in the coming years. This may justify a more expensive valuation.