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Light & Wonder (LNWO)
OTHER OTC:LNWO
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Light & Wonder
(OTC:LNWO)
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Rating:63Neutral
Price Target:
$103.00
▲(14.89% Upside)
Action:ReiteratedDate:02/25/26
The score reflects solid underlying financial momentum led by strong cash flow and improving profitability, reinforced by a positive forward outlook from the latest earnings call. These positives are tempered by weak current technical signals and lingering balance-sheet/leverage credibility concerns, while valuation appears fair but not clearly cheap and offers no dividend support.
Positive Factors
Strong cash generation
Sustained, large positive operating and free cash flow provides durable internal funding for R&D, Grover integration, and opportunistic buybacks while enabling organic deleveraging. This cash conversion supports capital allocation flexibility across cycles and reduces reliance on external financing.
Installed base and unit momentum
Rapid installed-base growth and higher unit shipments expand recurring revenue streams (participation/lease fees) and deepen operator relationships. A larger, modern installed base supports sticky aftermarket services and recurring cash flows, making land-based revenue less cyclical and more predictable.
Margin expansion and high gaming profitability
Material AEBITDA growth and sustained high gaming margins reflect scalable economics from recurring operations, content mix, and cost efficiencies. Durable margin expansion underpins cash generation and funds reinvestment in content and systems, supporting long-term competitive advantage.
Negative Factors
Balance-sheet / leverage credibility
A large historical debt load and a dramatic reported debt drop in 2025 (possible reporting change) create uncertainty about true leverage and financial flexibility. Outstanding principal debt and mid‑single digit net leverage targets mean refinancing and interest costs remain material risks to strategic optionality.
SciPlay retention and UA pressure
User retention and engagement issues in SciPlay’s key game require higher marketing and product investment to stabilize revenue. Digital segment volatility can erode margins and recurring revenue predictability over multiple quarters, making long-term digital profit growth less assured until products regain scale.
Regulatory tax headwinds (UK)
A structural tax rise in the U.K. materially raises operating costs for online gaming in a key market. Higher taxation can compress margins, force pricing or product changes, and reduce international iGaming profitability unless offset by pricing, product mix shifts, or partner contracts.
Light & Wonder (LNWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.83B
Dividend YieldN/A
Average Volume (3M)119.79K
Price to Earnings (P/E)28.0
Beta (1Y)1.09
Revenue Growth1.87%
EPS Growth42.43%
CountryUS
Employees6,800
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)-0.19
Shares Outstanding77,148,710
10 Day Avg. Volume64,705
30 Day Avg. Volume119,790
Financial Highlights & Ratios
PEG Ratio-2.60
Price to Book (P/B)34.92
Price to Sales (P/S)2.58
P/FCF Ratio17.68
Enterprise Value/Market Cap1.82
Enterprise Value/Revenue3.76
Enterprise Value/Gross Profit6.16
Enterprise Value/Ebitda11.49
Forecast
1Y Price Target
$144.00Price Target Upside60.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)6.43
Revenue Forecast (FY)$3.59B
Light & Wonder Business Overview & Revenue Model
Company DescriptionLight & Wonder, Inc. operates as a cross-platform games company in the United States and internationally. The company operates through three segments: Gaming, SciPlay, and iGaming segments. The Gaming segment sells game content and gaming machine; video gaming terminals; video lottery terminals, including conversion kits and spare parts; and table game products, including automatic card shufflers, deck checkers, table roulette chip sorters and other land-based table gaming equipment. It also leases or provides gaming content, gaming machines, and server-based system; sells and supports casino-management system based software and hardware; and licenses proprietary table games content to commercial, tribal, and governmental gaming operators. The SciPlay segment develops, markets, and operates social games on various online platforms. It sells virtual coins, chips, or bingo cards, which players can use to play slot games, table games, and bingo games. The iGaming segment provides a suite of digital gaming content, distribution platforms, player account management systems, and other iGaming content and services. This segment also offers the Open Platform System, which offers a range of reporting and administrative functions and tools providing operators control over various areas of digital gaming operations. Light & Wonder, Inc. was incorporated in 1984 and is headquartered in Las Vegas, Nevada.
How the Company Makes MoneyLight & Wonder generates revenue through multiple key streams. The Gaming sector contributes significantly through the sale and lease of gaming machines and equipment, as well as ongoing service and maintenance contracts. In the Digital sector, the company earns revenue from online gaming solutions, including casino games and sports betting platforms, often through partnerships with various online gaming operators. Additionally, Light & Wonder benefits from licensing agreements, where it allows third-party developers to utilize its technology and intellectual property. Strategic partnerships with casinos and gaming companies also enhance its reach and revenue potential, while continuous innovation in gaming technology keeps the company competitive.
Light & Wonder Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial picture: record and recurring revenue growth, strong consolidated AEBITDA and margin expansion, robust cash flow generation, accelerated unit shipments and scaling of the Grover acquisition, plus strategic investments (AI, R&D) and substantial shareholder returns. Material one-time charges (legal settlement, ASX transition costs, contingent acquisition adjustments) and some operational challenges (SciPlay/Jackpot Party, systems/tables timing, UK tax change, tariff impacts) weighed on GAAP profitability and created near-term noise. On balance, the business demonstrated durable recurring revenue momentum, margin sustainability, and a clear plan to delever and pursue growth, with the negatives appearing largely one-time or addressable.Q4-2025 Updates
Positive Updates
Record and Expanded Revenue Mix
Q4 consolidated revenue of $891M, up 12% year-over-year; full-year consolidated revenue of $3.3B, up 4% from 2024. Recurring revenue of $2.2B with margin and cash-flow expansion across the year.
Strong Consolidated Profitability and Margin Expansion
Q4 consolidated AEBITDA of $405M, up 29% year-over-year; full-year AEBITDA of $1.44B. Consolidated AEBITDA margins expanded ~500 basis points in Q4 and for full-year 2025.
Significant EPSa and Adjusted NPATA Growth
Adjusted NPATA for Q4 grew 27% to $161M and for the year grew 18% to $567M. EPSa increased 27% to $6.69 for the year.
Gaming Business Outperformance
Gaming revenue in Q4 rose 17% to $602M with gaming operations up 35% to $237M. Gaming AEBITDA grew 26% year-over-year to $323M and AEBITDA margin reached ~54% driven by recurring operations and cost efficiencies.
Installed Base and Unit Shipment Momentum
North American installed base increased 42% YoY to over 48,300 units (22nd consecutive quarter of premium installed base growth). Global gaming machine shipments rose 29% in units YoY to over 12,300; North America shipped a record ~7,000 units in the quarter.
Grover Acquisition Performance
Grover acquisition completed in May contributed $102M of revenue since close, added over 1,000 units since announcement, exited 2025 with >11,600 units installed, and added 345 units sequentially in Q4 — demonstrating fast scaling and recurring revenue contribution.
Digital Segments Showing Strength
iGaming delivered record Q4 revenue of $94M, up 21% YoY, and iGaming AEBITDA rose 44% YoY to $36M with 600 bps margin expansion; wagers processed via OGS grew 22% YoY to $29.2B. SciPlay direct-to-consumer revenue rose to 25% of Q4 SciPlay revenue (from 13% at end of 2024).
Cash Flow, Capital Returns and Capital Structure Actions
Q4 operating cash flow $319M (+58% YoY) and free cash flow $176M (+138% YoY); full-year operating cash flow $794M (+26%) and free cash flow $452M (+42%). Returned $877M via repurchases in 2025 (total $1.9B returned since 2022). Net debt leverage 3.4x within target; available liquidity ~$927M; repriced $2.1B term loan saving ~$5M annually.
Strategic Positioning and AI Investment
Completed sole ASX listing, resolved peer dispute, announced long-term targets ($2B consolidated AEBITDA and EPSa > $10.55 by 2028), and launched an AI transformation (AI-led Carbon game development kit) to improve productivity and game portability.
Negative Updates
Significant One-Time Charges and Q4 Net Loss
Q4 included a $128M settlement related to peer dispute plus other charges (totaling ~$177M restructuring and other), producing a Q4 net loss of $15M. Full-year net income decreased 18% YoY, impacted by $219M of restructuring and other charges.
Legal, Transition and Integration Costs
One-time costs included $75M in litigation settlements and ~$18M in professional services related to ASX transition and Grover acquisition; contingent consideration fair-value adjustment of $25M also affected results.
SciPlay Operational Challenges
SciPlay experienced modest revenue declines overall and a notable drop in average monthly payers at Jackpot Party (material scale game) requiring revamp and increased UA investment; stabilization only began in December 2025. SciPlay AEBITDA rose modestly (+8% YoY to $80M) but faced retention/engagement headwinds.
Product Timing and Regional Weaknesses
Systems and tables saw timing-related sales declines in Q4 (systems impacted by higher prior-year sales; tables lower utility sales in Asia). Tariff impacts and product mix expected to pressure near-term gaming margins (Q1 gaming AEBITDA margin guidance ~50% and tariff headwinds of mid- to high-single-digit millions per quarter).
Increased Interest Expense and Tax Headwinds
Interest expense rose by $13M YoY primarily due to higher debt from the Grover acquisition and share repurchases. Income tax expense increased by $32M due to a higher effective tax rate; full-year effective tax rate ~24% and expected 22–24% for 2026.
Regulatory and Market Headwinds (UK Tax Change)
U.K. online gaming tax increase to 40% (effective Q2 2026) is expected to adversely impact the business in that region and may reduce near-term international iGaming profitability despite mitigation efforts with partners.
Company Guidance
Light & Wonder expects "another year of strong adjusted NPATA and EPSa growth" in 2026 with the shape of earnings broadly similar to 2025 and reiterated its 2028 goals of $2.0 billion consolidated AEBITDA and EPSa > $10.55; near‑term modeling assumptions include a Q1 gaming AEBITDA margin of ~50%, continued North American premium net adds of 500+ units per quarter (ongoing net installed growth), combined R&D+CapEx targeted at ~17% of consolidated revenue (weighted to H1 for Grover ramp/Indiana), an effective tax rate of ~22–24%, and organic deleveraging through 2026 toward the lower end of a 2.5x–3.5x net‑debt leverage range (year‑end leverage was 3.4x). Management will remain opportunistic on buybacks after repurchasing $877M in 2025 (78% of the $1.5B program) and returning $1.9B since 2022; balance‑sheet/cash metrics to model include $927M available liquidity, $5.2B principal debt, a repriced $2.1B term loan (margin to 2% for ~ $5M annual savings), an effective net interest rate of ~6.65% (53% fixed / 47% floating), and strong cash generation trends (FY25 AEBITDA $1.44B; Q4 AEBITDA $405M; EPSa $6.69 in 2025), while noting the U.K. online gaming tax increase to 40% effective Q2'26 and continued SciPlay DTC expansion (25% DTC in Q4'25 vs 30% target by 2028).Light & Wonder Financial Statement Overview
Summary
Fundamentals are supported by strong multi-year revenue growth and especially strong recent cash generation (2025 operating cash flow $794M; free cash flow $484M). Offsetting this, balance-sheet risk/credibility is a key concern given historically heavy leverage and an abrupt 2025 debt step-change that reduces confidence in the leverage trend.Income Statement
Revenue has risen steadily from $1.7B (2020) to $3.3B (2025), with strong growth in several years (notably 2021–2023) and a slower pace in 2024. Profitability has improved materially versus 2020’s loss, with positive net income in most years and a solid 2024 net margin (~10.5%). However, 2025 profitability looks less robust than 2024 (net margin ~8.3%), and some margin fields appear inconsistent/missing (e.g., 2025 gross profit shown as 0 and EBIT margin shown as 0), which reduces confidence in the quality of the margin trend for the latest year.72
Positive
Balance Sheet
Leverage and equity have improved meaningfully over time: stockholders’ equity moved from negative in 2020–2021 to positive by 2022 and reached $636M in 2024, while debt-to-equity was very high in 2023–2024 (over 5x) but reported as much lower in 2025 (~0.33x) alongside a sharp drop in total debt (to $82M). That said, the 2025 debt figure is a major step-change versus prior years (~$3.9B) and may reflect a reporting change or data issue; absent clarity, balance-sheet risk remains a key watch item given the historically heavy debt load and relatively modest equity base versus total assets.54
Neutral
Cash Flow
Cash generation is a clear strength: operating cash flow is positive in most years and increased to $794M in 2025, with free cash flow of $484M and strong free-cash-flow growth in 2025. Free cash flow has generally tracked net income reasonably well (free cash flow running at ~53%–61% of net income in 2023–2025), supporting earnings quality. The main weakness is volatility—2022 saw negative operating cash flow and negative free cash flow—so while the recent trajectory is favorable, the business has shown periods of cash flow pressure.78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.31B | 3.19B | 2.90B | 2.51B | 2.15B |
| Gross Profit | 2.02B | 2.26B | 2.03B | 1.77B | 1.54B |
| EBITDA | 1.08B | 1.07B | 898.00M | 584.00M | 582.00M |
| Net Income | 276.00M | 336.00M | 163.00M | 3.67B | 371.00M |
Balance Sheet | |||||
| Total Assets | 6.46B | 5.42B | 5.55B | 6.01B | 7.88B |
| Cash, Cash Equivalents and Short-Term Investments | 167.00M | 196.00M | 425.00M | 914.00M | 585.00M |
| Total Debt | 5.24B | 3.92B | 3.93B | 3.95B | 8.75B |
| Total Liabilities | 6.22B | 4.79B | 4.79B | 4.85B | 9.99B |
| Stockholders Equity | 245.00M | 636.00M | 765.00M | 990.00M | -2.26B |
Cash Flow | |||||
| Free Cash Flow | 484.00M | 338.00M | 348.00M | -597.00M | 514.00M |
| Operating Cash Flow | 794.00M | 632.00M | 590.00M | -381.00M | 685.00M |
| Investing Cash Flow | -1.17B | -258.00M | -251.00M | 6.12B | -442.00M |
| Financing Cash Flow | 321.00M | -577.00M | -788.00M | -5.46B | -679.00M |
Light & Wonder Technical Analysis
Negative
89.65
Price Trends
106.92
Negative
96.36
Negative
93.20
Negative
Market Momentum
-4.87
Positive
28.84
Positive
9.95
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LNWO, the sentiment is Negative. The current price of 89.65 is below the 20-day moving average (MA) of 104.24, below the 50-day MA of 106.92, and below the 200-day MA of 93.20, indicating a bearish trend. The MACD of -4.87 indicates Positive momentum. The RSI at 28.84 is Positive, neither overbought nor oversold. The STOCH value of 9.95 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LNWO.
Light & Wonder Risk Analysis
Light & Wonder disclosed 53 risk factors in its most recent earnings report. Light & Wonder 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
Light & Wonder Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.23B | 3.69 | 87.98% | 0.84% | 5.91% | 336.91% | |
63 Neutral | $6.83B | 28.01 | 62.66% | ― | 1.87% | 42.43% | |
62 Neutral | $9.14B | 47.29 | 7.74% | ― | 0.05% | -94.07% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $10.76B | 34.46 | ― | 0.80% | -0.26% | -44.45% | |
50 Neutral | $5.01B | -10.13 | -13.11% | ― | 0.87% | 31.28% | |
44 Neutral | $2.38B | 13.13 | ― | ― | 11.32% | ― |
* Consumer Cyclical Sector Average
LNWO
Light & Wonder
90.98
-15.62
-14.65%
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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.