International Game Technology (IGT) continues trading at an appealing valuation despite rising more than 50% since last year, after the company had a bad quarter and engaged in the acquisition of Double Down Interactive, said Morley Campbell, Portfolio Manager, Analyst and Managing Director at NFJ Investment Group, LLC.
“We continue to hold International Game Technology today. The valuation is higher than it was in 2012. However, it currently trades at just 13 times forward earnings. The stock price is currently over $17 per share. But even today, on a price-to-cash flow basis, it’s just 10 times. On an enterprise value-to-EBITDA basis it’s just 7.3 times,” Campbell said.
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Campbell initiated a position in IGT in August 2012, around the time the stock dropped in price significantly due to a poor quarter and concerns over capital because of the recent acquisition, trading only at 10.2 times forward earnings.
“That compared quite favorably to both International Game Technology’s historical valuations and also International Game Technology’s peers’ valuations. The dividend yield was over 2%. For enterprise value to EBITDA, enterprise value to sales — pick your metric of choice — all of them were favorable. It was clearly screening very well,” Campbell said.
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