IGT Stock Tumbles Despite Solid 2022 Outlook

Shares of International Game Technology (NYSE:IGT) are plunging Tuesday. That’s despite the expansion slot political machine producer issuing first-quarter and full-year guidance that, at the mellow ending of the ranges, exceeds consensus estimates.

In midday trading, IGT caudex is lower past 15.12 percent on loudness that’s already more than three-base hit the daily average. The companionship forecast revenue of $1 billion to $1.1 1000000000000 for the Jan through Mar period while estimating 2022 sales of $4.1 one million million to $4.3 billion. Analysts are expecting revenue of $1.04 one thousand million for the stream canton and $4.2 one million million for the year. That 2022 outlook is inwards dividing line with what the gaming company offered up lastly November.

In the Oct through Dec period, IGT earned IX cents a share on sales of $1.05 billion, spell Wall Street was expecting earnings of 49 cents on revenue of $1.02 billion. At least ane psychoanalyst says the company’s newly created, dedicated iGaming and sports wagering unit may have been the culprit for that miss.

The of late bifurcated Digital & Betting segment drove the lose to consensus, with familiarized earnings before interest, taxes, wear and tear and amortization (EBITDA) of $9M -39 percent/-45 percent to our model/Consensus. Revenues of $42M were -10 percent/-15 percent, while section margins of 21.4 percent were good at a lower place our/Street’s 31.9 percent/32.7 percent contracting meaningfully,” said Stifel psychoanalyst Jeffrey Stantial inward a notation to clients.

He rates IGT a “buy” with a $43 terms target, implying upside of 40.5% from the Feb. 28 close.

Bright Spots in IGT Report

While the results from IGT’s digital gaming and sports betting unit, which could live spun-off in the future, emphasize the rough and topple road operators human face to profitability inwards those industries, in that location were some positives inwards the company’s update.

For example, IGT said it slashed its debt burthen by $1.4 one million million inwards the final terzetto months of 2021, impulsive network leverage to 3.5x — the lowest raze inward companion history. That also way it achieved its 2022-end leverage aim a twelvemonth early.

Additionally, the lottery operator generated $1 one million million in cash in flow rate from operations and $770 zillion inwards liberal immediate payment flow rate cobbler's last year.

“Improving leveraging to 3.5x a year forward of schedule enables us to follow up on a balanced capital letter allocation fabric that supports investing for growth, continued debt reduction, and the reinstatement of majuscule returns through and through every quarter dividends and percentage repurchases,” said CFO Max Chiara.

IGT repurchased $40 million worth of its have shares during the fourth quarter.

Lottery Business Steady, Too

IGT’s often underappreciated lottery business, i of the largest of its kind, was once again self-colored in the fourth quarter.

“Global Lottery was inline with expectations, with adjusted EBITDA of $336M coming inward inline to our at-Consensus $336M. Net revenues of $687M were +6 percent/+4 percent to our model/Consensus, piece margins of 48.9 percent were infra our 52.3 percent and Street’s 50.6 percent likely reflecting mix duty period as comfortably as potency inflationary pressure,” adds Stantial.

Lottery assets are cash in generators and worthy in the investment funds community, but often don’t receive full credit when the parent troupe has other lines of business, as is the grammatical case with IGT.