Is the international stock of gaming technology worth betting?
London-based International Game Technology (IGT) is an end-to-end gaming company. It provides a range of technology products and services in the lottery, machine games, sports betting and interactive games markets in North America, Asia and Europe. IGT previously operated through four segments: North America Gaming and Interactive (NAGI), North America Lottery, International and Italy. But under a new organizational structure, it now operates through two segments – Global Lottery and Global Gaming.
The company’s record third quarter revenue generation (ended September 30) was driven by the strongest same-store lottery sales growth it has seen in seven quarters. With stronger player demand and a slew of compelling new games, IGT’s digital and betting revenue grew 41% year-on-year to $ 104 million. The company even launched a full-service US sportsbook trading team in the third quarter.
In the past six months, the stock has climbed more than 81% to close yesterday’s trading session at $ 16.14. The company’s resilient business model, characterized by strong recurring revenues, and its balanced geographic and product mix with upside potential based on multiple factors, helped the stock achieve a “Strong Buy” rating in our rating system. exclusive.
Here’s how our proprietary POWR rating system rates IGT:
Commercial grade: A
IGT is currently trading above its 50-day and 200-day moving averages of $ 12.74 and $ 11.01 respectively, indicating an uptrend. Additionally, IGT has gained 25.3% over the past month, reflecting a strong near-term uptrend.
The Company’s revenue increased 54% sequentially to $ 981.5 million for the third quarter ended September 30, 2020. It was mainly due to strong growth in lottery sales in same-store and marked improvements from the second quarter in all major revenue streams. Global Lottery revenue grew 3% year-on-year to $ 570 million. The revenues of the United States and Canada accounted for over 45% of total revenues. Non-GAAP EPS increased 23.8% year-over-year to $ 0.26.
On December 18, IGT announced that its subsidiaries IGT Europe BV, IGT Austria GmbH and IGT Germany Gaming GmbH had entered into a strategic agreement to exclusively license the intellectual property of its GALAXIS and SYSTEM2Go casino central management systems (CMS) to Modulus Sarl. . On November 16, IGT announced that it had replaced a competitor’s system with its IGT ADVANTAGE (CMS) Casino Management System at the new Carousel Casino in South Africa.
The company announced on November 23 that it has entered into a multi-year agreement with Maverick Gaming, whereby IGT will provide its turnkey PlaySports solution to Grand Z Casino and Johnny Z’s Casino in Central City, Colorado and Z Casino in Black Hawk. , Colorado. IGT’s subsidiary, IGT Global Solutions Corporation, signed a seven-year contract with the Nebraska Lottery in November to serve as the primary supplier for its instant and draw-based games and related services.
Buy and keep note: A
In terms of proximity to its 52 week high, which is a key factor taken into account by our Buy & Hold Grade, IGT is well positioned. The stock is currently trading 4.6% below its 52-week high of $ 16.92, which it reached on December 18.
The long-term growth of the company can be attributed to the launch of new games, portfolio optimization, price increases, improved pricing structures and expanded distribution.
Peer Rating: A
IGT is currently ranked # 6 out of 23 stocks in the Entertainment – Casinos / Gambling sector. Caesars Entertainment Corporation (CZR), MGM Resorts International (MGM) and Las Vegas Sands Corp. (LVS) are other popular stocks in the entertainment industry – casinos / gambling.
While CZR topped IGT, gaining 28.9% over the past year, MGM and LVS have lost 8.9% and 17.9%, respectively, over the same period.
Industry Rank: C
The Entertainment Industry – Casinos / Gambling is ranked 66th out of 123 industries on StockNews.com. With the temporary closures of land-based casinos, the global gaming industry has been severely affected by the COVID-19 pandemic. However, the online gambling industry has grown considerably. In fact, the US Online Gaming Market Expected to Grow at a CAGR of 15.41% in the next five years.
Advances in technology, the existence of virtual reality, as well as increased security and privacy have ushered in a change in consumer behavior in this industry, which is expected to be sustained over the long term.
Overall POWR Rating: A (strong buy)
Overall, IGT is rated “strong buy” based on its short- and long-term optimism and strong growth prospects, as determined by the four components of our overall POWR rating.
As 2021 approaches, IGT has the potential to appreciate based on continued business growth, favorable earnings and revenue prospects and strong financial position. The company is well positioned to take advantage of a global market recovery.
The consensus estimate of revenue of $ 4.28 billion for next year represents a 21% year-over-year increase. Additionally, IGT has an impressive track record of surprising earnings, with the company beating consensus EPS estimates in each of the following four quarters. Its EPS is expected to grow to 718.7% next year.
Want more great investment ideas?
IGT shares were unchanged on Wednesday after trading hours. Year-to-date, IGT has gained 12.74%, compared to a 16.33% increase for the benchmark S&P 500 during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in economics at university and has a passion for writing, which led to his career as a research analyst. Following…