Multimedia Games, Inc. (NASDAQ:MGAM)

CAPS Rating: 4 out of 5

A supplier of interactive systems, electronic games, and gaming terminals for the Native American gaming market, as well as for the growing racetrack casino, charity and commercial bingo, and video lottery markets.


Player Avatar TMFInnovator (40.29) Submitted: 6/4/2013 7:38:24 PM : Outperform Start Price: $25.83 MGAM Score: +31.59

Wall Street just can't figure this one out.

- MGAM soars 19% in April after crushing estimates once again ($0.31 reported vs $0.19 estimate). But this is nothing new. MGAM has beaten estimates by AT LEAST 38% in each of the past four quarters.

- Current estimates are still below company expectations ($0.83 2013 EPS analyst estimates, vs $1 company expectations). If $1/share does indeed happen in 2013, the stock is still pricey at $26 today. But earnings doubled in '11 and then quadrupled in '12, so the valuation isn't exactly unreasonable.

- The economy is improving, and the gaming industry should benefit from additional consumer discretionary income.

Though perhaps not a "buy and forget about it" company, I'm willing to make the bet that they outperform in the short-term.

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