Playags (AGS) AI Stock Analysis

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Playags

(NYSE:AGS)

Rating:73Outperform

Price Target:

$13.50

▲(9.14%Upside)

Playags has demonstrated a strong recovery in financial performance with notable improvements in profitability and cash flow, albeit with a high level of leverage that poses a risk. The stock's positive technical indicators suggest upward momentum. The valuation appears attractive with a low P/E ratio, though the lack of a dividend may be less appealing to some investors. Overall, the company shows promise but requires careful monitoring of its debt levels.

Playags (AGS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$513.42M

Dividend YieldN/A

Average Volume (3M)452.20K

Price to Earnings (P/E)10.8

Beta (1Y)0.29

Revenue Growth6.60%

EPS Growth778.46%

CountryUS

Employees916

SectorConsumer Cyclical

Sector Strength58

IndustryGambling, Resorts & Casinos

Share Statistics

EPS (TTM)1.08

Shares Outstanding41,505,493

10 Day Avg. Volume436,313

30 Day Avg. Volume452,199

Financial Highlights & Ratios

PEG Ratio0.37

Price to Book (P/B)3.85

Price to Sales (P/S)0.00

P/FCF Ratio22.44

Enterprise Value/Market Cap1.40

Enterprise Value/Revenue0.46

Enterprise Value/Gross Profit2.81

Enterprise Value/Ebitda1.23

Forecast

1Y Price Target

$12.50

Price Target Upside1.05% Upside

Rating ConsensusHold

Number of Analyst Covering2

Playags Business Overview & Revenue Model

Company DescriptionPlayAGS (AGS) is a leading designer and supplier of gaming products and services for the casino industry. The company operates in three primary segments: Electronic Gaming Machines (EGMs), Table Products, and Interactive Solutions. PlayAGS provides a diverse range of gaming products, including slot machines, table games, and mobile gaming solutions, aimed at enhancing the gaming experience for players while driving revenue growth for casino operators.

How the Company Makes MoneyPlayAGS generates revenue through the sale, lease, and maintenance of its gaming products and services. The majority of its revenue comes from the Electronic Gaming Machines (EGMs) segment, where it sells and leases slot machines and related gaming products to casinos. Additionally, the company earns revenue from its Table Products segment by providing a variety of table games, progressive systems, and side bets. The Interactive Solutions segment also contributes to earnings by offering mobile and online gaming products, which are increasingly significant as digital gaming continues to grow. PlayAGS often partners with casino operators to deploy its gaming solutions, and these partnerships are crucial for expanding its market reach and enhancing revenue streams.

Playags Earnings Call Summary

Earnings Call Date:Mar 11, 2025

(Q4-2023)

% Change Since: 1.98%|

Next Earnings Date:May 08, 2025

Earnings Call Sentiment Positive

The earnings call highlights AGS's strong revenue and EBITDA growth, driven by record performances across its segments. However, concerns about market stability and limited international penetration pose challenges. The company's improved leverage profile and strategic focus on growth provide a positive outlook.

Q4-2023 Updates

Positive Updates

Record Revenue and EBITDA Growth

Revenues and adjusted EBITDA increased by 15% year-over-year, marking the 11th consecutive quarter of double-digit growth.

Global EGM Sales Surge

Global EGM sales increased 36% year-over-year to a record 1,519 units, with sales to nearly 180 unique customers.

Interactive Segment Growth

Interactive revenue grew by over 30% year-over-year to $3.4 million, with adjusted EBITDA increasing nearly 160% year-over-year.

Table Products Segment Expansion

Table Products sales and recurring revenue reached new records with an approximately 20% increase in adjusted EBITDA.

Improved Leverage Profile

Net leverage reduced to 3.2x from 3.8x at the start of the year, with a path to below 3.0x.

Negative Updates

Market Stability Concerns

While the market is stable, concerns remain about potential disturbances like weather impacting Q1 GGR.

Limited International Penetration

Currently, AGS has limited international market penetration outside of North America and Latin America.

High Free Cash Flow Conversion Expectations

Despite a 17% free cash flow conversion rate last year, expectations for significant improvement remain challenging.

Company Guidance

During the PlayAGS Fourth Quarter and Full Year 2023 Earnings Call, the company reported significant metrics illustrating its financial health and future outlook. AGS achieved a 15% year-over-year increase in revenues and adjusted EBITDA in Q4, marking its 11th consecutive quarter of double-digit growth and fifth consecutive quarter of double-digit adjusted EBITDA growth. Notably, Global EGM sales surged by 36% year-over-year, with 1,519 units sold, and Interactive revenue grew by over 30%, reaching $3.4 million, with Interactive adjusted EBITDA increasing by nearly 160% to $1.3 million. The Table Products segment also saw a 20% rise in adjusted EBITDA to $2.8 million, contributing to a full-year total of approximately $10 million. Free cash flow increased by more than 45% year-over-year to $11 million, and net leverage decreased to 3.2x from 3.8x at the start of the year. AGS anticipates further growth in 2024, with plans to expand its EGM segment, particularly in the mechanical reel and jumbo segments, and to leverage its Interactive segment, which boasts an annualized revenue and adjusted EBITDA run rate of $13 million and $5 million, respectively.

Playags Financial Statement Overview

Summary

Playags demonstrates a strong recovery and growth trajectory, with significant improvements in profitability and cash flow generation. The company has effectively increased its profitability margins and maintained positive cash flows. However, the high level of debt is a concern, which requires careful management to sustain financial health in the long term.

Income Statement

Positive

Playags shows strong profitability with improving margins over time. The gross profit margin is robust, and the net profit margin has improved significantly in recent years, moving from negative to positive, which indicates a strong recovery and growth in profitability. Revenue growth has been steady, although it slowed in the most recent TTM period. EBIT and EBITDA margins remain healthy, supporting overall profitability.

Balance Sheet

Positive

The company's debt-to-equity ratio is high, indicating significant leverage, a common trait in the gambling and resort industry. However, the return on equity has improved as profitability has increased, demonstrating effective use of equity. The equity ratio is on the lower side, suggesting a higher reliance on debt. Overall, while the company is heavily leveraged, it is managing its equity efficiently, but the high debt remains a risk factor.

Cash Flow

Positive

Operating cash flows have been consistently positive and growing, which is a strong indicator of financial health. The free cash flow has also seen growth, although it fluctuates due to capital expenditures. The operating cash flow to net income ratio is strong, reflecting a good conversion of earnings into cash. Despite the positive cash flow trends, the company's reliance on debt financing poses a risk.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
393.72M	394.87M	356.54M	309.44M	259.70M	167.01M
	Gross Profit
256.24M	276.80M	251.41M	222.76M	196.49M	118.13M
	EBIT
69.32M	72.41M	57.39M	37.97M	19.70M	-42.89M
	EBITDA
150.35M	151.49M	142.31M	105.86M	93.52M	36.40M
	Net Income Common Stockholders
50.51M	51.65M	428.00K	-8.04M	-22.57M	-85.38M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
39.48M	38.31M	50.94M	37.89M	94.98M	81.69M
	Total Assets
709.68M	709.59M	680.34M	684.75M	732.81M	740.78M
	Total Debt
544.74M	546.39M	564.98M	566.55M	620.17M	618.09M
	Net Debt
505.26M	508.09M	514.05M	528.66M	525.19M	536.40M
	Total Liabilities
592.31M	596.86M	612.67M	635.39M	691.24M	687.00M
	Stockholders Equity
117.38M	112.73M	67.67M	49.36M	41.57M	53.78M
Cash Flow		Free Cash Flow
24.92M	54.10M	24.28M	8.47M	26.80M	458.00K
	Operating Cash Flow
101.48M	101.25M	86.20M	77.71M	78.33M	36.17M
	Investing Cash Flow
-76.24M	-71.69M	-58.82M	-72.09M	-50.14M	-39.28M
	Financing Cash Flow
-17.32M	-33.56M	-14.18M	-62.72M	-14.90M	71.64M

Playags Technical Analysis

Technical Analysis Sentiment

Positive

Last Price12.37

Price Trends

50DMA

12.15

Positive

100DMA

12.11

Positive

200DMA

11.82

Positive

Market Momentum

MACD

0.06

Negative

RSI

68.16

Neutral

STOCH

81.74

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AGS, the sentiment is Positive. The current price of 12.37 is above the 20-day moving average (MA) of 12.29, above the 50-day MA of 12.15, and above the 200-day MA of 11.82, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 68.16 is Neutral, neither overbought nor oversold. The STOCH value of 81.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AGS.

Playags Risk Analysis

Playags disclosed 48 risk factors in its most recent earnings report. Playags reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Playags Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GAMB	79 Outperform	$418.69M	12.10	25.73%	―	24.67%	91.06%
ACEL	76 Outperform	$952.21M	22.71	18.42%	―	6.28%	-1.99%
AGS	73 Outperform	$513.42M	10.76	49.64%	―	6.60%	778.46%
Sector *	62 Neutral	$6.82B	11.05	2.80%	4.32%	2.67%	-24.92%
FLL	44 Neutral	$109.01M	―	-79.70%	―	13.92%	-54.82%

* Consumer Cyclical Sector Average

Performance Comparison

AGS

Playags

12.37

0.84

7.29%

FLL

Full House Resorts

3.03

-1.82

-37.53%

ACEL

Accel Entertainment

11.25

1.43

14.56%

GAMB

Gambling.com

11.76

4.09

53.32%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.