Overall LNW gets a fundamental rating of 6 out of 10. We evaluated LNW against 132 industry peers in the Hotels, Restaurants & Leisure industry. LNW has an excellent profitability rating, but there are some minor concerns on its financial health. LNW may be a bit undervalued, certainly considering the very reasonable score on growth This makes LNW very considerable 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.
In the past year LNW had a positive cash flow from operations.
LNW had positive earnings in 4 of the past 5 years.
Of the past 5 years LNW 4 years had a positive operating cash flow.

1.2 Ratios

The Return On Assets of LNW (6.13%) is better than 72.93% of its industry peers.
LNW has a better Return On Equity (55.19%) than 90.98% of its industry peers.
With a decent Return On Invested Capital value of 11.81%, LNW is doing good in the industry, outperforming 76.69% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for LNW is in line with the industry average of 10.37%.
The last Return On Invested Capital (11.81%) for LNW is above the 3 year average (10.25%), which is a sign of increasing profitability.

		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

LNW's Profit Margin of 12.39% is amongst the best of the industry. LNW outperforms 80.45% of its industry peers.
LNW's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 25.77%, LNW belongs to the best of the industry, outperforming 90.23% of the companies in the same industry.
LNW's Operating Margin has improved in the last couple of years.
The Gross Margin of LNW (72.74%) is better than 88.72% of its industry peers.
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

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so LNW is still creating some value.
LNW has less shares outstanding than it did 1 year ago.
The number of shares outstanding for LNW has been reduced compared to 5 years ago.
LNW has a worse debt/assets ratio than last year.

2.2 Solvency

LNW has an Altman-Z score of 2.08. This is not the best score and indicates that LNW is in the grey zone with still only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.08, LNW is in the better half of the industry, outperforming 60.15% of the companies in the same industry.
LNW has a debt to FCF ratio of 12.70. This is a negative value and a sign of low solvency as LNW would need 12.70 years to pay back of all of its debts.
LNW has a Debt to FCF ratio (12.70) which is in line with its industry peers.
A Debt/Equity ratio of 6.77 is on the high side and indicates that LNW has dependencies on debt financing.
LNW has a Debt to Equity ratio of 6.77. This is in the lower half of the industry: LNW underperforms 63.91% of its industry peers.

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

ROIC/WACC1.41

WACC8.38%

2.3 Liquidity

LNW has a Current Ratio of 2.13. This indicates that LNW is financially healthy and has no problem in meeting its short term obligations.
LNW has a better Current ratio (2.13) than 89.47% of its industry peers.
LNW has a Quick Ratio of 1.85. This is a normal value and indicates that LNW is financially healthy and should not expect problems in meeting its short term obligations.
LNW has a better Quick ratio (1.85) than 84.21% of its industry peers.

		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

The Earnings Per Share has grown by an impressive 42.55% over the past year.
The Earnings Per Share has been growing slightly by 5.53% on average over the past years.
Looking at the last year, LNW shows a small growth in Revenue. The Revenue has grown by 1.87% in the last year.
Measured over the past years, LNW shows a small growth in Revenue. The Revenue has been growing by 5.95% on average per year.

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.
The Revenue is expected to grow by 5.29% on average over the next years.

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

The Price/Earnings ratio is 18.78, which indicates a rather expensive current valuation of LNW.
Based on the Price/Earnings ratio, LNW is valued a bit cheaper than the industry average as 69.17% of the companies are valued more expensively.
LNW is valuated rather cheaply when we compare the Price/Earnings ratio to 28.82, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 12.23, the valuation of LNW can be described as correct.
Based on the Price/Forward Earnings ratio, LNW is valued a bit cheaper than 79.70% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of LNW to the average of the S&P500 Index (25.95), we can say LNW is valued rather cheaply.

		Industry Rank	Sector Rank
PE	18.78
Fwd PE	12.23

4.2 Price Multiples

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

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

4.3 Compensation for Growth

LNW's 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.
A more expensive valuation may be justified as LNW's earnings are expected to grow with 33.93% in the coming years.