In the world of gaming and betting, International Game Technology (IGT) has emerged as a company with a robust lottery segment that’s catching the eye of investors. Amidst a flourishing market, IGT’s lottery division stands out as a key driver of growth, offering a compelling reason for investment consideration.
The Allure of IGT’s Lottery Operations
IGT’s lottery business is a powerhouse, contributing significantly to the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA). With the lottery segment accounting for a substantial portion of IGT’s pro-forma earnings, it’s clear that this division is not just a side show but the main event for the company’s financial performance.
The success of IGT’s lottery segment is not by chance. It’s the result of a strategic focus on this area, which has traditionally been a high-margin, cash-generating business. Despite the general public’s massive expenditure on lottery games, investors have not always fully appreciated the value of lottery operations. IGT’s stock, therefore, presents a unique value proposition, trading at a multiple that is arguably undervalued relative to its peers.
Strategic Moves and Market Position
IGT isn’t resting on its laurels. The company is actively exploring strategic alternatives for its global gaming and PlayDigital units. This could potentially streamline IGT’s focus on its lucrative lottery business and clarify its investment thesis. Such moves could also highlight the lottery arm’s profitability, making it more attractive to investors.
Analysts are taking note of IGT’s position in the market. With a “buy” rating and a price target suggesting significant upside, there’s a growing consensus that IGT’s shares offer a value bet. The company’s gaming EBITDA growth is outpacing peers, and its North American install base shows consistent growth, indicating that IGT is successfully capturing market share.
A Bet Worth Taking?
For investors, the odds of winning the lottery might be slim, but the prospects of IGT’s lottery business seem much more favorable. With its strong performance and strategic initiatives, IGT’s lottery segment could be the ticket to robust returns. As the company continues to make calculated moves in the gaming industry, its lottery business remains a bright spot that could lead to a re-rating of its stock value.
