Rating Change #9
International Game Tech (IGT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally poor debt management and weak operating cash flow.
Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, INTL GAME TECHNOLOGY's return on equity exceeds that of both the industry average and the S&P 500.
- INTL GAME TECHNOLOGY's earnings per share declined by 32.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL GAME TECHNOLOGY increased its bottom line by earning $0.97 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.97).
- The share price of INTL GAME TECHNOLOGY has not done very well: it is down 11.27% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 33.1% when compared to the same quarter one year ago, falling from $73.70 million to $49.30 million.
International Game Technology engages in the design, development, manufacture, and marketing of electronic gaming equipment and systems worldwide. The company has a P/E ratio of 17, above the average computer software & services industry P/E ratio of 16.9 and below the S&P 500 P/E ratio of 17.7. International Game Tech has a market cap of $4.73 billion and is part of the technology sector and computer software & services industry. Shares are down 8.4% year to date as of the close of trading on Thursday.You can view the full International Game Tech Ratings Report or get investment ideas from our investment research center.