Shares of gaming products and services provider, PlayAGS, Inc. (AGS) have declined about 12.3% over the past month. AGS’ recent fourth-quarter performance was a mixed bag with bottom-line lagging estimates despite double-digit growth in the company’s top-line.
Revenue increased 50.6% year-over-year to $70.2 million, beating estimates by $1.1 million. Net loss per share at $0.25, on the other hand, came in wider than the consensus by $0.18. This growth in revenue was attributable to robust performance across the company’s electronic gaming machines (EGMs), Table Products, and Interactive verticals. The major part of the revenue growth came from the EGM vertical, with sales growing to $64.5 million as compared to $42.4 million a year ago. Impressively, this was AGS’ fourth consecutive quarter of sequential revenue growth.
According to management, while 2021 was a year of transition for AGS, 2022 would be the year of acceleration where the company will look to “further leverage the continuous improvement in people, products, processes,” to further bolster its financial performance.
With these developments in mind, let’s have a look at what’s changed in AGS’ key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, PlayAGS’ top risk category is Finance & Corporate, contributing 21 of the total 51 risks identified for the stock, compared to a sector average of 12 risk factors under the same category.
In its recent report, the company has added one key risk factor under the Finance & Corporate risk category.
AGS highlighted that its borrowings under the Amended Credit Agreement are at variable rates of interest that are linked with the Secured Overnight Financing Rate (SOFR), which exposes the company to interest rate risk.
SOFR has been identified by the Federal Reserve as its preferred alternative rate for the USD London Interbank Offered Rate (LIBOR). However, there can be no assurance if SOFR will perform in the same manner as USD LIBOR. With the transition away from USD-LIBOR, the risk remains that these changes may lead to higher debt service obligations for AGS.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in PlayAGS by 149.1 thousand shares in the last quarter, indicating a neutral hedge fund confidence signal in the stock.
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