International Game Technology PLC (NYSE:IGT), which is in the hospitality business, and is based in United Kingdom, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $17.74 at one point, and dropping to the lows of $12.78. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether International Game Technology’s current trading price of $13.7 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at International Game Technology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is International Game Technology still cheap?According to my valuation model, International Game Technology seems to be fairly priced at around 18% below my intrinsic value, which means if you buy International Game Technology today, you’d be paying a fair price for it. And if you believe that the stock is really worth $16.72, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because International Game Technology’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from International Game Technology?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of International Game Technology, it is expected to deliver a relatively unexciting top-line growth of 3.6% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in IGT’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on IGT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on International Game Technology. You can find everything you need to know about International Game Technology in the latest infographic research report. If you are no longer interested in International Game Technology, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.