LNW

Light & Wonder ($LNW) Directors Buy $1.3M During Price Plunge... Insider Confidence Signal Emerges

08/13/2025 01:49

Light & Wonder's ($LNW) directors have captured investor attention with aggressive buying during recent share price declines. Between August 7-11, as shares plunged to $77-84 levels, Director Jamie Odell purchased 8,311 shares (~$650K) while Director Antonia Korsanos acquired 8,065 shares (~$645K). This contrasts sharply with executive selling earlier in March. Light & Wonder is a Las Vegas-based global cross-platform gaming company operating through three primary segments: Gaming, SciPlay, and iGaming. Founded in 1984 with ~6,800 employees, the company ranks among the top three electronic gaming machine manufacturers globally alongside International Game Technology and Aristocrat Leisure. With licenses across most gambling jurisdictions worldwide, it's well-positioned for both physical and digital gaming market growth. The insider trading patterns reveal telling differences. March saw significant executive selling, including President Matthew Wilson's disposal of 18,243 shares (~$1.9M), but these were primarily driven by restricted stock vesting and tax obligations. August's director purchases, however, appear to be voluntary investment decisions, with Odell notably buying on consecutive days. Recent earnings present mixed signals. Q2 2025 revenue of $809M declined 1.1% YoY and missed analyst consensus by 5.93%. However, EPS of $1.58 exceeded expectations by 9.72% and improved from prior year. This suggests revenue growth is slowing but profitability is improving, with net margin expanding from 10% to 12%. Investors should particularly note the company's cash generation capabilities. Operating cash flow reached $611M (TTM basis) with adjusted EBITDA of $1.09B. This demonstrates healthy cash flows despite a high debt-to-equity ratio of 699%. However, cash holdings of only $136M appear limited against total debt of $4.9B. The most significant risk remains litigation with Aristocrat Leisure. A September 2024 preliminary injunction regarding the Dragon Train game's intellectual property triggered a 20%+ single-day decline. Additionally, December 2024 saw approval of class-action arbitration by casinos, adding legal uncertainty. Despite near-term challenges, long-term prospects remain solid. Analysts project 6.8% average annual revenue growth over three years, with EPS growth of 47.3% in 2025 and 27.6% in 2026. Q3 and Q4 2025 EPS growth is expected to accelerate to 89.7% and 57.5% respectively. Valuation metrics suggest opportunity. Forward P/E of 12.53-12.63x appears undervalued relative to expected growth, with PEG ratio of 0.59-0.62 below 1.0. This indicates relatively attractive pricing versus growth prospects. Key monitoring indicators include litigation progress, Dragon Train revenue impact, Gaming segment adjusted EBITDA maintenance above $280M, and iGaming's double-digit growth sustainability. The directors' buying level of $77-84 likely represents important technical support, while a breakthrough above $95-100 could confirm upward momentum. Current levels warrant cautious consideration of insider judgment while respecting high leverage and legal risks.