Head to Head Review: Light & Wonder (NASDAQ:LNW) & Open Text (NASDAQ:OTEX)

Light & Wonder (NASDAQ:LNW) and Open Text (NASDAQ:OTEX) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, profitability, analyst recommendations and valuation.

Profitability

This table compares Light & Wonder and Open Text’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Light & Wonder	9.30%	49.91%	7.27%
Open Text	8.35%	24.34%	6.60%

Insider and Institutional Ownership

88.1% of Light & Wonder shares are owned by institutional investors. Comparatively, 70.4% of Open Text shares are owned by institutional investors. 2.1% of Light & Wonder shares are owned by insiders. Comparatively, 10.6% of Open Text shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Light & Wonder and Open Text”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Light & Wonder	$2.90 billion	2.95	$163.00 million	$3.22	30.15
Open Text	$5.77 billion	1.41	$465.09 million	$1.73	17.68

Open Text has higher revenue and earnings than Light & Wonder. Open Text is trading at a lower price-to-earnings ratio than Light & Wonder, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Light & Wonder and Open Text, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Light & Wonder	1	4	6	2	2.69
Open Text	0	8	3	0	2.27

Light & Wonder presently has a consensus price target of $107.36, indicating a potential upside of 10.59%. Open Text has a consensus price target of $35.90, indicating a potential upside of 17.36%. Given Open Text’s higher possible upside, analysts clearly believe Open Text is more favorable than Light & Wonder.

Volatility and Risk

Light & Wonder has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500. Comparatively, Open Text has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Summary

Light & Wonder beats Open Text on 11 of the 15 factors compared between the two stocks.

About Light & Wonder

Light & Wonder, Inc. operates as a cross-platform games company in the United States and internationally. The company operates through three segments: Gaming, SciPlay, and iGaming segments. The Gaming segment sells game content and gaming machine; video gaming terminals; video lottery terminals, including conversion kits and spare parts; and table products, including automatic card shufflers, deck checkers, table roulette chip sorters and other land-based table gaming equipment. It also leases or provides gaming content, gaming machines, and server-based system; sells and supports casino-management system based software and hardware; and licenses proprietary table games content to commercial, tribal and governmental gaming operators. The SciPlay segment develops, markets, and operates social games on various mobile and web platforms, as well as other games in the hyper-casual space. It sells virtual coins, chips, or bingo cards, which players can use to play slot games, table games, or bingo games. The iGaming segment provides a suite of digital gaming content, distribution platforms, player account management systems, and other iGaming content and services. This segment also offers the Open Platform System, which offers a range of reporting and administrative functions and tools providing operators control over various areas of digital gaming operations. Light & Wonder, Inc. was incorporated in 1984 and is headquartered in Las Vegas, Nevada.

About Open Text

Open Text Corporation provides information management software and solutions. The company offers content services, which includes content collaboration and intelligent capture to records management, collaboration, e-signatures, and archiving; and operates experience cloud platform that provides customer experience and web content management, digital asset management, customer analytics, AI and insights, e-discovery, digital fax, omnichannel communications, secure messaging, and voice of customer, as well as customer journey, testing, and segmentation. It also provides cybersecurity cloud solutions to protect, prevent, detect, respond and quickly recover from threats across endpoints, network, applications, IT infrastructure and data, AI-led threat intelligence; and to protect critical information and processes through threat intelligence, forensics, identity, encryption, and cloud-based application security. In addition, the company offers business network cloud for digital supply chains and secure e-commerce ecosystems including digitize and automate procure-to-pay and order-to-cash processes; IT operations management cloud for automation and advancement of IT support and asset management; and analytics & AI cloud solutions that offers artificial intelligence with practical usage to provide organizations with actionable insights and better automation, such as visualizations, advanced natural language processing and understanding, and integrated computer vision capabilities. In addition, it provides application automation cloud, developers cloud, and services. Further, it has strategic partnerships with SAP SE, Google Cloud, Amazon AWS, Microsoft Corporation, Oracle Corporation, Salesforce.com Corporation, DXC Technology Company, Accenture plc, Capgemini Technology Services SAS, Deloitte Consulting LLP, Hewlett Packard Enterprises, and Tata Consultancy Services. Open Text Corporation was incorporated in 1991 and is headquartered in Waterloo, Canada.