International Game Technology PLC's (NYSE:IGT) price-to-earnings (or "P/E") ratio of 55x might make it look like a strong sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 16x and even P/E's below 9x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.
Recent times haven't been advantageous for International Game Technology as its earnings have been falling quicker than most other companies. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. If not, then existing shareholders may be very nervous about the viability of the share price.
See our latest analysis for International Game Technology
NYSE:IGT Price to Earnings Ratio vs Industry January 2nd 2024 Want the full picture on analyst estimates for the company? Then our free report on International Game Technology will help you uncover what's on the horizon.
How Is International Game Technology's Growth Trending?
The only time you'd be truly comfortable seeing a P/E as steep as International Game Technology's is when the company's growth is on track to outshine the market decidedly.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 72%. At least EPS has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.
Turning to the outlook, the next year should generate growth of 224% as estimated by the eight analysts watching the company. With the market only predicted to deliver 10%, the company is positioned for a stronger earnings result.
With this information, we can see why International Game Technology is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Key Takeaway
While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
We've established that International Game Technology maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.
Before you settle on your opinion, we've discovered 3 warning signs for International Game Technology (1 is potentially serious!) that you should be aware of.
If these risks are making you reconsider your opinion on International Game Technology, explore our interactive list of high quality stocks to get an idea of what else is out there.
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與美國市場相比,International Game Technology PLC(紐約證券交易所代碼:IGT)的55倍市盈率(或 “市盈率”)可能使其看起來像是強勁的拋售,美國約有一半的公司的市盈率低於16倍,甚至市盈率低於9倍也很常見。但是,市盈率可能相當高是有原因的,需要進一步調查以確定其是否合理。