Gaming Industry Supplier Shares International game technology (NYSE:IGT) jumped as much as 12.5% in trading on Tuesday after the company reported earnings. Shares closed the day up 10%.
Revenue rose 4% in the quarter to $1.05 billion and operating profit fell 3% to $252 million. But the company remained positive with free cash flow of $115 million generated in the quarter.
Net debt also fell 17% from a year ago to $5.8 billion. The level of debt has always been the main argument against IGT in the long term. The company reduced balance sheet risk and became a better trader in the process.
Net income was down in the quarter, which isn’t a good sign, but management has done a great job improving the company’s operations, and that seems to be what the market is rewarding.
Management also announced a dividend of $0.20 per share, which is a positive sign that management expects free cash flow to be sustained over the long term. I don’t think it will be a big growth business given the lack of new casinos being built around the world, but it could be a good stockpile of cash and dividends, which would have been hard to imagine a while ago just a few years.
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Travis Hoium has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
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