Multimedia Games (MGAM)
With the stock down more than 13% since early March, it would be easy to assume Multimedia Games Holding Company (MGAM) was headed for a nasty earnings report at the end of April. The market was wrong, however. MGAM posted a 25% increase in revenue for the quarter, and a 28% improvement in earnings … and that was before the acquisition of PokerTek (PTEK). Bringing PokertTek into the fold will almost assure a fourth straight year of revenue and income growth.
And it hasn’t been chump-change growth either. Once the company finally shook off the recession, the top line has grown from 2010’s $118 million to last year’s $189 million. Annual profits have swelled from $2.63 million to $35 million during that time for Multimedia Games Holding Company; that’s a growth rate most other small cap stocks can only envy.
It’s still not a cheap stock, even with the recent weakness, priced at a trailing P/E of 22.3. But plenty of earnings beats and a double-digit growth rate make the premium worth it … especially after the stock’s multi-month nap.