International Game Technology (IGT), mcap=$4bn, price $20.05 vs $19.55

$IGT pitch:
– Leading player in the lottery and slot manufacturing.
– Lottery operations are 65% of revenues and 85% of EBITDA.
– Trades at 7x EBITDA with industry transactions getting done at 12x.
– The lottery industry significantly outperformed during COVID-19, reaching new/younger players over that time frame.
– The digital lottery is creating new growth opportunities.
– The company is actively returning capital to shareholders via a dividend and repurchases on the open market.

$IGT valuation:
– On normalized basis trades <7x EBITDA or a 12%+ FCF.
– Comps and recent transaction precedents are at 12x EBITDA.
– SOTP valuation results in $31/share (base) and $45/share (high) targets.

Exp. gain: +60-100% to $31-$45/share.

Full IGT write-up (free guest account required):

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