Intrinsic value of International Game Technology - IGT

Previous Close

$14.07

  Intrinsic Value

$7.37

stock screener

  Rating & Target

sell

-48%

Previous close

$14.07

 
Intrinsic value

$7.37

 
Up/down potential

-48%

 
Rating

sell

We calculate the intrinsic value of IGT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  5,664
  5,794
  5,943
  6,110
  6,296
  6,499
  6,720
  6,960
  7,218
  7,495
  7,791
  8,108
  8,444
  8,802
  9,182
  9,584
  10,010
  10,460
  10,936
  11,439
  11,969
  12,528
  13,118
  13,739
  14,393
  15,081
  15,806
  16,569
  17,371
  18,215
Variable operating expenses, $m
  5,703
  5,814
  5,941
  6,084
  6,241
  6,415
  6,603
  6,807
  7,027
  7,263
  6,640
  6,909
  7,196
  7,501
  7,824
  8,167
  8,530
  8,914
  9,320
  9,748
  10,200
  10,676
  11,179
  11,708
  12,265
  12,852
  13,470
  14,120
  14,803
  15,523
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  5,703
  5,814
  5,941
  6,084
  6,241
  6,415
  6,603
  6,807
  7,027
  7,263
  6,640
  6,909
  7,196
  7,501
  7,824
  8,167
  8,530
  8,914
  9,320
  9,748
  10,200
  10,676
  11,179
  11,708
  12,265
  12,852
  13,470
  14,120
  14,803
  15,523
Operating income, $m
  -39
  -20
  2
  27
  54
  84
  117
  152
  191
  232
  1,152
  1,198
  1,248
  1,301
  1,357
  1,417
  1,480
  1,546
  1,617
  1,691
  1,769
  1,852
  1,939
  2,031
  2,128
  2,229
  2,337
  2,449
  2,568
  2,693
EBITDA, $m
  1,320
  1,350
  1,385
  1,424
  1,467
  1,514
  1,566
  1,622
  1,682
  1,746
  1,815
  1,889
  1,968
  2,051
  2,139
  2,233
  2,332
  2,437
  2,548
  2,665
  2,789
  2,919
  3,057
  3,201
  3,354
  3,514
  3,683
  3,861
  4,048
  4,244
Interest expense (income), $m
  0
  497
  512
  530
  549
  571
  596
  623
  652
  684
  718
  755
  794
  836
  880
  928
  978
  1,031
  1,088
  1,147
  1,210
  1,277
  1,347
  1,421
  1,499
  1,581
  1,668
  1,759
  1,855
  1,956
  2,062
Earnings before tax, $m
  -536
  -532
  -527
  -522
  -517
  -512
  -506
  -500
  -493
  -487
  397
  405
  412
  421
  429
  439
  448
  459
  469
  481
  492
  505
  518
  532
  546
  561
  577
  594
  612
  630
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  107
  109
  111
  114
  116
  118
  121
  124
  127
  130
  133
  136
  140
  144
  147
  152
  156
  160
  165
  170
Net income, $m
  -536
  -532
  -527
  -522
  -517
  -512
  -506
  -500
  -493
  -487
  290
  295
  301
  307
  314
  320
  327
  335
  343
  351
  359
  369
  378
  388
  399
  410
  421
  434
  447
  460

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  16,000
  16,368
  16,789
  17,261
  17,784
  18,359
  18,984
  19,661
  20,390
  21,172
  22,009
  22,903
  23,854
  24,865
  25,937
  27,074
  28,277
  29,549
  30,894
  32,313
  33,811
  35,391
  37,056
  38,810
  40,657
  42,603
  44,650
  46,805
  49,072
  51,456
Adjusted assets (=assets-cash), $m
  16,000
  16,368
  16,789
  17,261
  17,784
  18,359
  18,984
  19,661
  20,390
  21,172
  22,009
  22,903
  23,854
  24,865
  25,937
  27,074
  28,277
  29,549
  30,894
  32,313
  33,811
  35,391
  37,056
  38,810
  40,657
  42,603
  44,650
  46,805
  49,072
  51,456
Revenue / Adjusted assets
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
Average production assets, $m
  6,610
  6,762
  6,936
  7,131
  7,347
  7,584
  7,843
  8,122
  8,423
  8,747
  9,092
  9,462
  9,854
  10,272
  10,715
  11,185
  11,682
  12,207
  12,763
  13,349
  13,968
  14,620
  15,308
  16,033
  16,796
  17,600
  18,446
  19,336
  20,272
  21,257
Working capital, $m
  -227
  -232
  -238
  -244
  -252
  -260
  -269
  -278
  -289
  -300
  -312
  -324
  -338
  -352
  -367
  -383
  -400
  -418
  -437
  -458
  -479
  -501
  -525
  -550
  -576
  -603
  -632
  -663
  -695
  -729
Total debt, $m
  9,488
  9,807
  10,172
  10,582
  11,036
  11,535
  12,077
  12,665
  13,298
  13,977
  14,704
  15,479
  16,304
  17,182
  18,113
  19,099
  20,144
  21,248
  22,415
  23,647
  24,947
  26,318
  27,764
  29,286
  30,890
  32,579
  34,356
  36,226
  38,194
  40,263
Total liabilities, $m
  13,888
  14,208
  14,573
  14,983
  15,437
  15,935
  16,478
  17,065
  17,698
  18,378
  19,104
  19,880
  20,705
  21,582
  22,513
  23,500
  24,544
  25,649
  26,816
  28,048
  29,348
  30,719
  32,164
  33,687
  35,291
  36,979
  38,756
  40,627
  42,594
  44,664
Total equity, $m
  2,112
  2,161
  2,216
  2,278
  2,348
  2,423
  2,506
  2,595
  2,691
  2,795
  2,905
  3,023
  3,149
  3,282
  3,424
  3,574
  3,733
  3,901
  4,078
  4,265
  4,463
  4,672
  4,891
  5,123
  5,367
  5,624
  5,894
  6,178
  6,477
  6,792
Total liabilities and equity, $m
  16,000
  16,369
  16,789
  17,261
  17,785
  18,358
  18,984
  19,660
  20,389
  21,173
  22,009
  22,903
  23,854
  24,864
  25,937
  27,074
  28,277
  29,550
  30,894
  32,313
  33,811
  35,391
  37,055
  38,810
  40,658
  42,603
  44,650
  46,805
  49,071
  51,456
Debt-to-equity ratio
  4.490
  4.540
  4.590
  4.640
  4.700
  4.760
  4.820
  4.880
  4.940
  5.000
  5.060
  5.120
  5.180
  5.230
  5.290
  5.340
  5.400
  5.450
  5.500
  5.540
  5.590
  5.630
  5.680
  5.720
  5.760
  5.790
  5.830
  5.860
  5.900
  5.930
Adjusted equity ratio
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -536
  -532
  -527
  -522
  -517
  -512
  -506
  -500
  -493
  -487
  290
  295
  301
  307
  314
  320
  327
  335
  343
  351
  359
  369
  378
  388
  399
  410
  421
  434
  447
  460
Depreciation, amort., depletion, $m
  1,359
  1,370
  1,383
  1,397
  1,413
  1,430
  1,449
  1,469
  1,491
  1,515
  664
  691
  719
  750
  782
  816
  853
  891
  932
  974
  1,020
  1,067
  1,117
  1,170
  1,226
  1,285
  1,346
  1,411
  1,480
  1,552
Funds from operations, $m
  822
  838
  855
  874
  896
  918
  943
  970
  998
  1,028
  953
  986
  1,020
  1,057
  1,096
  1,137
  1,180
  1,226
  1,274
  1,325
  1,379
  1,436
  1,495
  1,558
  1,625
  1,694
  1,768
  1,845
  1,926
  2,012
Change in working capital, $m
  -4
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
Cash from operations, $m
  827
  843
  861
  881
  903
  926
  952
  979
  1,008
  1,039
  965
  999
  1,034
  1,071
  1,111
  1,153
  1,197
  1,244
  1,293
  1,345
  1,400
  1,458
  1,519
  1,583
  1,651
  1,722
  1,797
  1,876
  1,958
  2,045
Maintenance CAPEX, $m
  -473
  -482
  -494
  -506
  -521
  -536
  -554
  -572
  -593
  -615
  -638
  -664
  -691
  -719
  -750
  -782
  -816
  -853
  -891
  -932
  -974
  -1,020
  -1,067
  -1,117
  -1,170
  -1,226
  -1,285
  -1,346
  -1,411
  -1,480
New CAPEX, $m
  -128
  -152
  -174
  -195
  -216
  -237
  -258
  -280
  -301
  -323
  -346
  -369
  -393
  -418
  -443
  -470
  -497
  -526
  -555
  -586
  -619
  -653
  -688
  -725
  -763
  -804
  -846
  -890
  -936
  -985
Cash from investing activities, $m
  -601
  -634
  -668
  -701
  -737
  -773
  -812
  -852
  -894
  -938
  -984
  -1,033
  -1,084
  -1,137
  -1,193
  -1,252
  -1,313
  -1,379
  -1,446
  -1,518
  -1,593
  -1,673
  -1,755
  -1,842
  -1,933
  -2,030
  -2,131
  -2,236
  -2,347
  -2,465
Free cash flow, $m
  226
  208
  194
  180
  166
  153
  140
  127
  114
  101
  -19
  -34
  -50
  -66
  -82
  -99
  -116
  -135
  -153
  -173
  -193
  -214
  -236
  -259
  -283
  -308
  -334
  -361
  -389
  -419
Issuance/(repayment) of debt, $m
  278
  319
  365
  410
  454
  498
  543
  587
  633
  679
  727
  775
  826
  877
  931
  987
  1,044
  1,104
  1,167
  1,232
  1,300
  1,371
  1,445
  1,523
  1,604
  1,689
  1,777
  1,870
  1,968
  2,070
Issuance/(repurchase) of shares, $m
  570
  581
  583
  585
  586
  587
  588
  589
  590
  590
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  848
  900
  948
  995
  1,040
  1,085
  1,131
  1,176
  1,223
  1,269
  727
  775
  826
  877
  931
  987
  1,044
  1,104
  1,167
  1,232
  1,300
  1,371
  1,445
  1,523
  1,604
  1,689
  1,777
  1,870
  1,968
  2,070
Total cash flow (excl. dividends), $m
  1,074
  1,109
  1,142
  1,174
  1,207
  1,239
  1,271
  1,304
  1,337
  1,370
  708
  741
  776
  812
  849
  888
  928
  970
  1,014
  1,059
  1,107
  1,157
  1,209
  1,264
  1,321
  1,381
  1,444
  1,509
  1,578
  1,650
Retained Cash Flow (-), $m
  -570
  -581
  -583
  -585
  -586
  -587
  -588
  -589
  -590
  -590
  -111
  -118
  -126
  -133
  -142
  -150
  -159
  -168
  -177
  -187
  -198
  -209
  -220
  -232
  -244
  -257
  -270
  -284
  -299
  -315
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  504
  528
  559
  590
  620
  651
  683
  715
  747
  780
  597
  623
  650
  678
  707
  738
  769
  802
  836
  872
  909
  949
  989
  1,032
  1,077
  1,124
  1,173
  1,225
  1,279
  1,336
Discount rate, %
  12.50
  13.13
  13.78
  14.47
  15.19
  15.95
  16.75
  17.59
  18.47
  19.39
  20.36
  21.38
  22.45
  23.57
  24.75
  25.99
  27.29
  28.65
  30.08
  31.59
  33.17
  34.82
  36.57
  38.39
  40.31
  42.33
  44.45
  46.67
  49.00
  51.45
PV of cash for distribution, $m
  448
  413
  379
  343
  306
  268
  231
  195
  163
  133
  78
  61
  47
  35
  26
  18
  13
  9
  6
  4
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  83.4
  69.6
  58.2
  48.8
  41.2
  34.9
  29.6
  25.3
  21.7
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8
  18.8

International Game Technology PLC operates and provides technology products and services across lotteries, electronic gaming machines, sports betting, and interactive gaming markets worldwide. It offers a suite of lottery-enabled point-of-sale terminals; online lottery transaction processing systems; supplies instant ticket games; and printing services, instant ticket marketing plans and graphic design, programming, production, packaging, and shipping and delivery services. The company also provides video lottery terminals (VLT), VLT central systems, and VLT games to government customers; video and traditional mechanical reel slot machines and casino systems to casino operators; and amusement with prize machines and games to licensed operators, as well as designs, develops, manufactures, and provides cabinets, games, systems, and software in legal gaming markets. In addition, it is involved in the provision of sports betting platform that offers betting on sporting and motor sports events, as well as non-sporting events; and interactive gaming (or iGaming) that enables game play through the Internet, such as Internet poker, table games, slots, bingo, iLottery, and gaming management systems. Further, the company provides transaction processing of commercial transactions, such as prepaid cellular telephone recharges, prepaid mobile data, collection and payment services for the payment of utility bills, money transfer services, ticketing for sporting and musical events, credit card transactions, social security contributions and payments, and prepaid cards. Additionally, it offers collection, and processing and network services on behalf of third parties; and issues electronic money through immediate conversion of funds received. The company was formerly known as GTECH S.p.A. and changed its name to International Game Technology PLC in April 2015. The company was incorporated in 2014 and is headquartered in London, the United Kingdom.

FINANCIAL RATIOS  of  International Game Technology (IGT)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IGT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IGT stock intrinsic value calculation we used $5553 million for the last fiscal year's total revenue generated by International Game Technology. The default revenue input number comes from 0001 income statement of International Game Technology. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IGT stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.5%, whose default value for IGT is calculated based on our internal credit rating of International Game Technology, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of International Game Technology.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IGT stock the variable cost ratio is equal to 101%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for IGT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for International Game Technology.

Corporate tax rate of 27% is the nominal tax rate for International Game Technology. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IGT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IGT are equal to 116.7%.

Life of production assets of 13.7 years is the average useful life of capital assets used in International Game Technology operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IGT is equal to -4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2078.04482759 million for International Game Technology - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 203.869 million for International Game Technology is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of International Game Technology at the current share price and the inputted number of shares is $2.9 billion.

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