The gaming industry witnessed a slowdown in 2022 in the face of a turbulent macroeconomic environment. However, with more high-budget, high-profile games and next-generation consoles expected to hit the market this year, the industry is projected to grow significantly.

Furthermore, the gaming market is expected to flourish with the increasing adoption of cryptocurrencies, blockchain technology, and NFTs. About the future of Web3 gaming, Yat Siu, Co-Founder and Executive Chairman of Animoca Brands, said, “We’re going to see a big wave of high-quality games emerging in the market, which will basically bring on more mass adoption. That will come into full effect somewhere in 2023, maybe spilling over into 2024.”

Due to rapid technological proliferation, the global gaming market size, which was worth $202.64 billion in 2021, is expected to expand at a CAGR of 10.2% from 2022 to 2030.

Against this backdrop, it could be wise to add fundamentally sound gaming stocks Playtika Holding Corp. (PLTK), SciPlay Corporation (SCPL), and Gravity Co., Ltd. (GRVY) to your portfolio.

Playtika Holding Corp. (PLTK)

PLTK is a mobile game developer based in Herzliya Pituarch, Israel. The company distributes its portfolio of casual and casino-themed games to end customers through various web and mobile platforms and its own proprietary platforms.

On November 21, 2022, PLTK announced the execution of an agreement for a $25 million minority investment in Turkish mobile gaming company Ace Games. This is expected to be an important milestone in the execution of its new games’ investment strategy.

PLTK’s trailing-12-month net income margin of 11.02% is 144.4% higher than the industry average of 4.51%. Also, its trailing-12-month EBIT margin of 16.6% is 79.5% higher than the industry average of 9.25%.

For the third quarter that ended September 30, 2022, PLTK’s revenue increased 1.9% year-over-year to $647.80 million. During the same period, casual games, comprising 54.9% of overall revenues, grew 14.4% year-over-year.

The company’s Average Daily Paying Users (DPUs) increased 5.8% year-over-year to 3,10,000 users. PLTK’s adjusted EBITDA for the quarter stood at $230.70 million, while its net income came in at $68.20 million or $0.17 per share.

For the fiscal second quarter ending June 2023, analysts expect PLTK’s revenue and EPS to increase 1% and 130.1% year-over-year to $666.40 million and $0.21, respectively.

The stock has gained 9.1% over the past five days and 1.4% intraday to close the last trading session at $8.63.

PLTK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

PLTK has an A grade for Value and a B for Quality. Within the Entertainment – Toys & Video Games industry, it is ranked #3 out of 20 stocks.

Click here for additional POWR Ratings for Momentum, Growth, Sentiment, and Stability for PLTK.

SciPlay Corporation (SCPL)

SCPL develops, markets, and sells a portfolio of social games for mobile and web platforms internationally. The company offers social casino games as well as casual games. The company also provides titles from third-party licensed brands.

In November, Josh Wilson, Chief Executive Officer of SCPL, said, “With our investments, we are delivering better gaming content and experiences than ever before, deepening players’ engagement and boosting player life-time value.”

SCPL’s trailing-12-month return on total capital of 16.67% is 335.4% higher than the industry average of 3.83%. Also, its trailing-12-month EBIT margin of 22.84% is 147% higher than the industry average of 9.25%.

In the fiscal third quarter that ended September 30, SCPL’s revenue increased 16.5% year-over-year to $170.80 million. Net income attributable and net income attributable to SCPL per share came in at $4.80 million and $0.20, respectively, for the same quarter.

Analysts expect SCPL’s revenue for the fiscal first quarter ending March 2023 to come at $173.42 million, which represents a 9.8% improvement from the prior-year quarter.

The company’s EPS for the same quarter is expected to come in at $0.25, representing a 40.7% increase year-over-year. It has surpassed the consensus revenue estimates in three of the trailing four quarters.

SCPL’s shares have gained 34.5% over the past three months to close its last trading session at $15.86. Also, it has gained 1.2% over the past five days.

It’s no surprise that SCPL has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.

SCPL has an A grade for Value and a B for Growth and Quality. The stock is ranked first within the Entertainment – Toys & Video Games industry.

Click here to access SCPL’s Momentum, Stability, and Sentiment grades.

Gravity Co., Ltd. (GRVY)

GRVY distributes, develops, and publishes online games in South Korea, Taiwan, Thailand, and Japan. It categorizes products into over three categories: mobile games and applications, online games, and other games, and game-related products and services. The company is based in Seoul, South Korea.

On November 15, GRVY officially launched its widely acclaimed game “Ragnarok Begins” in North America. The game can be played on both PC and mobile and is expected to significantly boost the company’s top line.

GRVY’s trailing-12-month net income margin of 13.34% is 196% higher than the industry average of 4.51%. Also, its trailing-12-month EBIT margin of 19.76% is 113.8% higher than the industry average of 9.25%.

For the third quarter ended September 30, GRVY’s revenues from online games increased 5.3% year-over-year to $13.46 million. Net profit attributable to GRVY came in at $11.23 million, and earnings per ADS stood at $1.62. The company’s total current assets stood at $264.08 million as of September 30, 2022, compared to $213.83 million as of December 31, 2021.

The stock has gained 2.7% over the past month to close the last trading session at $41.91. Moreover, it has gained 3.9% intraday.

The company’s strong fundamentals are reflected in its POWR Ratings. GRVY has an overall rating of B, which translates to Buy in our proprietary rating system.

It has an A grade for Value and a B for Quality. GRVY is ranked #5 in the same industry.

To see the additional ratings for GRVY’s Growth, Momentum, Stability, and Sentiment, click here.

PLTK shares were trading at $9.06 per share on Wednesday afternoon, up $0.43 (+4.98%). Year-to-date, PLTK has gained 6.46%, versus a 0.74% rise in the benchmark S&P 500 index during the same period.

About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors. More...

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