Barbarian At The Gate: International Game Technology (IGT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified International Game Technology ( IGT) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified International Game Technology as such a stock due to the following factors:

  • IGT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.6 million.
  • IGT has traded 2.9 million shares today.
  • IGT traded in a range 217.6% of the normal price range with a price range of $0.54.
  • IGT traded above its daily resistance level (quality: 46 days, meaning that the stock is crossing a resistance level set by the last 46 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on IGT:

International Game Technology, a gaming company, designs, develops, manufactures, and markets casino-style gaming equipment, systems technology, and game content for land-based and online markets worldwide. The stock currently has a dividend yield of 3.5%. IGT has a PE ratio of 13.8. Currently there are 3 analysts that rate International Game Technology a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for International Game Technology has been 4.9 million shares per day over the past 30 days. International Game Technology has a market cap of $3.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.45 and a short float of 5.7% with 3.29 days to cover. Shares are down 31.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates International Game Technology as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • INTL GAME TECHNOLOGY has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 $1.02 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $1.02).
  • The gross profit margin for INTL GAME TECHNOLOGY is rather high; currently it is at 63.26%. 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 5.03% trails the industry average.
  • Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, IGT has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 67.0% when compared to the same quarter one year ago, falling from $78.20 million to $25.80 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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