Long-established in the Travel & Leisure industry, International Game Technology PLC (IGT, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 11.13%, juxtaposed with a three-month change of 5.63%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of International Game Technology PLC.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 3/10
- Profitability rank: 6/10
- Growth rank: 5/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned International Game Technology PLC the GF Score of 63 out of 100, which signals poor future outperformance potential.
Company Snapshot: International Game Technology PLC
International Game Technology PLC is a gaming company that delivers entertaining and responsible gaming experiences for players across all channels. The company's operating segments include Global Lottery, Global Gaming, and Digital & Betting. It generates maximum revenue from the Global Lottery segment. Global Lottery segment provides lottery products and services to governmental organizations through operating contracts, facilities management contracts, lottery management agreements, and product sales contracts. Geographically, it derives a majority of revenue from the United States. The company has a market cap of $6.69 billion and sales of $4.27 billion, with an operating margin of 16.09%.
Financial Strength Analysis
International Game Technology PLC's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 2.35, which positions it worse than 67.62% of 559 companies in the Travel & Leisure industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 1.03, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.08 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 4.25, which is worse than 91.78% of 669 companies in the Travel & Leisure industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While International Game Technology PLC has a strong reputation in the industry, its financial health and growth potential raise concerns about its ability to maintain its historical performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
