International Game Technology (IGT) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of International Game Technology (IGT)? Shares have been on the move with the stock up 8.5% over the past month. The stock hit a new 52-week high of $33.41 in the previous session. International Game Technology has gained 46.5% since the start of the year compared to the 15.8% move for the Zacks Consumer Discretionary sector and the 38.8% return for the Zacks Gaming industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 9, 2023, IGT reported EPS of $0.49 versus consensus estimate of $0.39.
For the current fiscal year, IGT is expected to post earnings of $1.21 per share on $4.2 billion in revenues. This represents a -39.2% change in EPS on a -0.57% change in revenues. For the next fiscal year, the company is expected to earn $1.65 per share on $4.32 billion in revenues. This represents a year-over-year change of 36.16% and 2.95%, respectively.
Valuation Metrics
IGT may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
IGT has a Value Score of A. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 27.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 25.3X. On a trailing cash flow basis, the stock currently trades at 6.1X versus its peer group's average of 11X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, IGT currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if IGT fits the bill. Thus, it seems as though IGT shares could have potential in the weeks and months to come.
How Does IGT Stack Up to the Competition?
Shares of IGT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Wynn Resorts, Limited (WYNN). WYNN has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Wynn Resorts, Limited beat our consensus estimate by 261.11%, and for the current fiscal year, WYNN is expected to post earnings of $1.95 per share on revenue of $6.03 billion.
Shares of Wynn Resorts, Limited have gained 2% over the past month, and currently trade at a forward P/E of 55.66X and a P/CF of 57.24X.
The Gaming industry is in the top 33% of all the industries we have in our universe, so it looks like there are some nice tailwinds for IGT and WYNN, even beyond their own solid fundamental situation.
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International Game Technology (IGT) : Free Stock Analysis Report
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