Shuffle Master Rolls Dice, Beats Earnings

Gaming company Shuffle Master Inc. (SHFL) reported better than expected earnings last Thursday after the bell. The manufacturer of entertainment-based products for the gaming industry reported earnings of $0.12 / share, beating analyst estimates by $0.03. The company also beat on revenues, reporting $54.6 million for Q4, a near 16% beat of the street’s $47.2 million estimates.

The earnings beat was founded mostly on higher electronic gaming sales, perhaps presaging a revived casino business. Though management maintains a cautious outlook, they reiterated that there will be potential for further revenue growth in 2010. One analyst covering the stock raised his price target to $12 based on the report.

Technically speaking, SHFL broke out of a cup and handle patter that began on 11/18/09 on Friday following Thursday night’s report. Shares gained solid ground on low volume the two days leading into the report, but broke out on a huge volume spike Friday, indicating significant bullish-ness. The stock nearly touched its 52-week high at $9.90 but retreated, closing the week at $9.48. Normally, the breakout of the cup and handle would be enough to consider the stock a buy, but given that it has ran up almost 5%, I would suggest waiting for a break of the 52-week mark, ideally on solid volume, before giving this one a try.

Disclosure: No positions in SHFL.

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