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

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is International Game Technology (IGT). IGT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.55, which compares to its industry's average of 18.41. Over the last 12 months, IGT's Forward P/E has been as high as 13.61 and as low as 7.26, with a median of 10.32.

Investors should also note that IGT holds a PEG ratio of 0.86. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IGT's PEG compares to its industry's average PEG of 1.62. Over the last 12 months, IGT's PEG has been as high as 1.36 and as low as 0.73, with a median of 1.03.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. IGT has a P/S ratio of 0.6. This compares to its industry's average P/S of 1.42.

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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