Why International Game Technology's Stock Popped 15% Today

MarketsMotley Fool

What happened

Shares of lottery and casino industry supplier International Game Technology (NYSE: IGT) jumped as much as 15.3% in trading Tuesday after reporting third-quarter earnings. At 10:45 a.m. EST shares were still up 13.8% on the day.

Continue Reading Below

So what

Revenue fell 4% in the third quarter to $1.22 billion and operating loss exploded to $556 million, or $3.95 per share. The loss was driven by a $714 million charge to writedown the Gaming and Interactive unit to fair value. Adjusting for that loss, earnings were $0.40 per share.

Analysts were only expecting earnings of $0.24 per share on revenue of $1.16 billion, so the adjusted results easily topped the level investors were expecting.

Now what

The more notable development may have been that net debt declined 8% versus a year ago to $7.34 billion in the quarter. After a string of acquisitions, International Game Technology had built a level of debt that was likely unsustainable long term. Reducing debt will also reduce the risk the company faces if the economy and gaming industries decline in the next few years.

Given declining revenues and the huge writedown of acquired assets, I don't think IGT is a great buy after third-quarter results, but beating expectations is often enough to push a stock higher and that's what happened on Tuesday.

10 stocks we like better than International Game TechnologyWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and International Game Technology wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 6, 2017

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.