Time to book profits in science game stock?

According to the new strategic plan, Science Games (NASDAQ: SGMS) is seeking divestments in the lottery and sports betting businesses to reduce its debt and improve its margins. However, the company has $9 billion of long-term debt on the balance sheet, which exceeds the current market capitalization. Thus, Trefis believes that the SGMS share has little upside potential. In recent filings, the company highlighted the strong recovery of its Gaming segment after the lull seen in recent quarters. In addition, the digital segment continued to show better results thanks to the rise in sports betting and the growing popularity of its main customers FanDuel and Wynn Resorts. While the company’s revenues in the second quarter of 2021 have returned to pre-pandemic levels seen in the second quarter of 2019, high interest costs are weighing on operating cash flow.

According to machine learning engine Trefis, which identifies trends in a company’s historical stock price data, Scientific Games stock is likely to gain 3.2% over the next month (twenty-one trading days) given the –0.3% decline over the past week (five trading days).

But how would those numbers change if you wanted to hold shares of Scientific Games for a shorter or longer period? You can test the response and many other combinations on the Trefis Machine Learning Engine to Test Scientific Games Stock’s Chances of Upside After Fall. You can test the chances of recovery over different time intervals of a quarter, a month or even a single day!

MACHINE LEARNING ENGINE – try it yourself:

IF The SGMS share evolved by -5% over five trading days, THEN over the next twenty-one trading days, the SGMS share will move by one medium of 6.6%, with a probability of a positive return of 56.2% over this period.

Moreover, given a -5% movement for the stock over 5 trading days, it has historically experienced a excess return 5.3% against the S&P500 over the next 21 trading days, with a 53.7% chance of a positive excess return.

Some fun scenarios, FAQs, and making sense of science game stock movements:

Question 1: Is the average return of Scientific Games shares higher after a decline?

Responnse: Consider two situations,

Consider two situations,

Case 1: Scientific Games stock drops -5% or more in one week

Case 2: Scientific Games inventory increases by 5% or more in one week

Is the average stock return of Scientific Games higher in the next month after Case 1 or Case 2?

SGMS share fares better after case 1with an average return of 6.6% over the following month (21 trading days) in case 1 (where the security has just suffered a loss of 5% over the previous week), compared to an average return of 3.9% for case 2.

By comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in Case 1, and an average return of just 0.5% for Case 2, as detailed in our dashboard which details the average return of the S&P 500 after a decline or rise.

Try the Trefis machine learning engine above to see for yourself how Scientific Games stock is likely to perform after a specific gain or loss over a period of time.

Question 2: Does patience pay off?

Responnse: If you buy and hold shares of Scientific Games, it is expected that over time, the short-term fluctuations will cancel each other out, and the long-term positive trend will favor you – at least if the company is by otherwise solid.

All in all, according to data and calculations from the Trefis machine learning engine, patience absolutely pays off for most actions!

For the SGMS stock, the returns over the next N days after a variation of -5% over the last five trading days are detailed in the table below, as well as the returns of the S&P500:

You can try the engine to see what this chart looks like for Scientific Games after a bigger loss in the last week, month or quarter.

Question 3: What about the average return after a rise if you wait a bit?

Responnse:

The average return after a rise is naturally lower than that after a fall as detailed in the previous question. Interestingly, however, if a stock has been gaining in the past few days, you’re better off avoiding short-term bets for most stocks – although SGMS stock seems to be an exception to this general observation.

The returns of SGMS over the next N days after a 5% change over the last five trading days are detailed in the table below, along with the returns of the S&P500:

It is powerful enough to test the trend of Scientific Games stocks for yourself by changing the entries in the charts above.

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