Sep
26
2008
International Game
Technology (IGT)
The stock of International Game Technology has rallied 9%
from its 52 week low struck on the 23rd of September and presents a
good opportunity to short the stock. The stock is rallying again today 4.75% on
a Goldman Sachs Analyst opinion of increased sales in the next quarter.
Fundamentals
The company
fundamentals are not great which has caused the stock to fall 60% over the past
52 weeks to a low of $15.22 on September 23rd. Sales are decreasing
3% for the year compared to their last fiscal year. And earnings are decreasing
15% from a year ago period. The stock pays out a 3.5% dividend which would be
appealing if the stock hadn’t fallen as much as it has this year.
Goldman Sachs
Analysts are more upbeat about next
year at they predict an increase of 3% in revenue and 11% in earnings. Steven
Kent at Goldman Sachs cited two reasons in a report today why the company’s
revenues could increase in the near future, a November trade show and November
ballot initiatives to allow more gambling in states with budget shortfalls. He
feels these two factors could offset losses in revenue from delayed casino
replacements and expansions.
The Trade
The
gambling industry is still weak and I cannot see states making large
investments in gambling in time to increase the company’s earnings before their
next two announcements. The stock should fall back to the mid 15 level before
any improved earnings or revenue numbers are available. This is a good
opportunity to short the stock.