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Is International Game Technology (IGT) Stock Undervalued Right Now?

Zacks Equity Research
Microsoft (MSFT) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is International Game Technology (IGT). IGT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 11.32 right now. For comparison, its industry sports an average P/E of 20.44. Over the past 52 weeks, IGT's Forward P/E has been as high as 19.35 and as low as 8.42, with a median of 10.95.

Investors should also note that IGT holds a PEG ratio of 1.13. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. IGT's PEG compares to its industry's average PEG of 1.34. Within the past year, IGT's PEG has been as high as 1.36 and as low as 0.84, with a median of 1.01.

Finally, investors will want to recognize that IGT has a P/CF ratio of 3.20. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. IGT's current P/CF looks attractive when compared to its industry's average P/CF of 12.22. Over the past 52 weeks, IGT's P/CF has been as high as 16.36 and as low as -54.39, with a median of 3.18.

Value investors will likely look at more than just these metrics, but the above data helps show that International Game Technology is likely undervalued currently. And when considering the strength of its earnings outlook, IGT sticks out at as one of the market's strongest value stocks.


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