NEW YORK ( TheStreet) -- International Game Technology (NYSE: IGT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. 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 gross profit margin for INTL GAME TECHNOLOGY is rather high; currently it is at 65.30%. Regardless of IGT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.10% trails the industry average.
- IGT, with its decline in revenue, underperformed when compared the industry average of 10.2%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
-- Written by a member of TheStreet RatingsStaff