Technology stock

Why international gaming tech stocks fell 16.8% on Tuesday

What happened

Gaming Industry Supplier Shares international game Technology (NYSE:IGT) fell 16.8% in trading on Tuesday after the company released its fourth quarter 2021 financial results. Shares ended the day down 13.8%.

So what

Revenue for the quarter rose 19% to $1.05 billion as the gaming industry generally recovered from the pandemic. The company went from a loss of $242 million a year ago to a net profit of $19 million, or $0.09 a share, but analysts had expected a profit of $0.39 per share.

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Management also said it was reinstating a dividend of $0.20 per share and repurchasing $40 million worth of stock. Free cash flow of $771 million and debt reduction from $7.3 billion to $5.9 billion to end the year were also positive signs.

Now what

The market’s reaction to IGT’s results is really about analysts’ shortcomings in their estimate of how quickly the bottom line would improve. Coming out of the pandemic, it will be difficult to estimate how quickly revenues and profits will reach a “normal” level, and that’s what I think we’re seeing today.

Despite the missed gains, I see a lot of positives in IGT’s results. Cash flow is strong, debt is down, and it’s clear there’s a lot of growth in the gaming industry today. The market may not like IGT today, but in the long term, it is a company well positioned to take advantage of the growth of gaming around the world.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.