International Game Technology PLC (IGT, Financial) has experienced a daily loss of -8.59%, with a 3-month loss of -22.75%. With an Earnings Per Share (EPS) of 1.33, the question arises: is the stock fairly valued? This article aims to answer this question through a comprehensive valuation analysis. So, let's delve into it.
An Overview of International Game Technology PLC
International Game Technology PLC is a leading gaming company that offers entertaining and responsible gaming experiences across all channels. The company operates through three segments: Global Lottery, Global Gaming, and Digital & Betting. The majority of its revenue is generated from the Global Lottery segment and the United States. Here's a look at the income breakdown of International Game Technology PLC:
Understanding the GF Value of International Game Technology PLC
The GF Value is a proprietary measure of a stock's intrinsic value, calculated using historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
International Game Technology PLC (IGT, Financial) appears to be fairly valued, according to GuruFocus Value calculation. At its current price of $25.76 per share and the market cap of $5.20 billion, International Game Technology PLC's stock appears to be fairly valued. As a result, the long-term return of its stock is likely to be close to the rate of its business growth.
Assessing the Financial Strength of International Game Technology PLC
It's crucial to evaluate the financial strength of a company before investing in its stock. Companies with poor financial strength present a higher risk of permanent loss. A look at the cash-to-debt ratio and interest coverage can provide valuable insights into a company's financial strength. International Game Technology PLC has a cash-to-debt ratio of 0.08, which ranks worse than 83.03% of 819 companies in the Travel & Leisure industry. The overall financial strength of International Game Technology PLC is 4 out of 10, indicating that its financial strength is poor.
Profitability and Growth of International Game Technology PLC
Investing in profitable companies carries less risk, especially if they have demonstrated consistent profitability over the long term. International Game Technology PLC has been profitable 5 years over the past 10 years. Its operating margin of 16.09% is better than 73.75% of 819 companies in the Travel & Leisure industry.
Growth is one of the most crucial factors in a company's valuation. Companies that grow faster create more value for shareholders. International Game Technology PLC has an average annual revenue growth of 1.7%, which ranks better than 57.91% of 765 companies in the Travel & Leisure industry. However, its 3-year average EBITDA growth is 4.9%, which ranks worse than 50.16% of 608 companies in the Travel & Leisure industry.
Return on Invested Capital vs. Weighted Average Cost of Capital
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. Ideally, the return on invested capital should be higher than the weighted cost of capital. For International Game Technology PLC, the return on invested capital is 4.37, and its cost of capital is 8.9.
Conclusion
In conclusion, the stock of International Game Technology PLC (IGT, Financial) appears to be fairly valued. The company's financial condition is poor, and its profitability is fair. Its growth ranks worse than 50.16% of 608 companies in the Travel & Leisure industry. To learn more about International Game Technology PLC stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
