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Even the best stock pickers will make plenty of bad investments. Anyone who held International Game Technology PLC (NYSE:IGT) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 55%. However, the longer term returns haven't been so bad, with the stock down 20% in the last three years. The falls have accelerated recently, with the share price down 19% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
International Game Technology isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year International Game Technology saw its revenue fall by 2.2%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 55%. Fingers crossed this is the low ebb for the stock. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
International Game Technology is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for International Game Technology in this interactive graph of future profit estimates.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for International Game Technology the TSR over the last year was -53%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
International Game Technology shareholders are down 53% for the year (even including dividends), but the broader market is up 3.5%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 3.6% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Before forming an opinion on International Game Technology you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.