Is Wall Street Underestimating Light & Wonder Stock’s Potential?

Here is why we think Light & Wonder (LNW) stock deserves consideration as a value stock. It is currently trading nearly 32% below its 1 year high, and also trading at a PS multiple which is below the average for the last 3 years. However, it has reasonable fundamentals for its level of valuation.

• Reasonable Revenue Growth: 3.9% LTM and 11.7% last 3 year average.
• Cash Generative: Nearly 10.4% free cash flow margin and 24.7% operating margin LTM.
• No Major Margin Shocks: Light & Wonder has avoided any margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, LNW stock trades at a PE multiple of 18.3
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher 3 year average revenue growth, and better operating margins

As a quick background, Light & Wonder provides technology-based products and services for gaming and lottery industries, including gaming machines, lottery products, player loyalty programs, and interactive marketing campaigns globally.

Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Separately, consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell LNW Stock to see if Light & Wonder still has an edge that holds up under the hood.

Stocks Like These Can Outperform. Here Is Data

Below are statistics for stocks with same selection strategy applied between 12/31/2016 and 6/30/2025.

• Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
• Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 20% with 67% win rate.

But Consider The Risk

That said, LNW isn’t immune to big drops. It fell about 74% in the Global Financial Crisis and dipped 76% during the 2018 correction. The Covid pandemic hit even harder, knocking it down roughly 86%. Even the inflation shock saw a pullback of over 53%. So, while there might be strong fundamentals, sharp market swings can still take a heavy toll.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read LNW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.