Value and Growth Potential in IGT

My busy-ness precedes me.  Unfortunately I have not gotten around to posting recently, but I figured I would re-up with this unorthodox (for me) article.  Usually I tend to focus on the technical side of things, but here is a little bit of analysis I (and my good friend Taylor Malueg) did on International Game Technology (IGT):

Overview: IGT develops the software and manufactures the hardware for gaming systems in casinos in 16 countries, with headquarters in Reno and Las Vegas. They are industry leader in manufacturing of and software for digital slot machines.

Recent History:

2008-2010—Experimental Expansion: IGT sought to gain market share globally opening new offices in the UK, Mexico, China (Beijing), and Japan, which included acquisitions of smaller companies such as Cyberview Technology. This phase, which proved aggressive, opened up IGT to competition back in the US, its core of business. Thus they lost market share, as well as share value, as their product development was neglected. Earnings and margins fell.

2011—Back on Track: IGT realized this underperforming trend, and are currently seeking to capitalize on their advanced technological gaming systems. Competition for newer, more intricate software technology is greater than ever. Focus back on what IGT is best at, will help them regain their market share, leading to income growth.

Main Competitors—Casino Gaming Software Development and System Integration:

Bally Technologies Inc. (BYI)—Cap: 1.36B

WMS Industries (WMS)—Cap: 1.24B
(Bally poses the greatest threat for IGT, as they have taken some of their US market share.  WMS is currently restructuring their business model, which leaves a good deal of uncertainty in their ability to compete.)
Some fundamental comparisons (quarterly data):

Operating Income on Assets


Fundamental outlook:
As seen by quarterly income numbers, IGT seems to be getting their core business back on track, and with their expansion into the East Asian and Latin American markets, their seems to be growth potential as well.  They remain the industry leader in producing digital slot machines, but remain diversified on the entirety of the software gaming technology.  Though the gaming industry can be unpredictable with volatility and uncertainty surrounding gambling regulations,
IGT will remain at the top of the casino game developing companies. 
Based on the weekly chart, there is significant support for IGT around $13.50-$13.75:


Bullish on IGT at price between $14.25 and $14.50.

 

Hope you enjoyed the change of pace.

-Daniel Nall

About these ads

About dcnall

A college student with an eye on the financial market, learning everything I can to get an edge.
This entry was posted in Weekly Report. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s