What happened
Shares of International Game Technology (IGT 1.00%) were up 16.7% as of 11:31 a.m. ET on Tuesday after the company reported better-than-expected earnings results for the third quarter.
The company announced accelerating growth on the top and bottom lines, which is great news for investors, who had seen the stock price slashed almost in half year to date on lower growth expectations.
So what
IGT completed the acquisition of iSoftBet, a leading gaming content provider, which boosted the company's revenue growth in the quarter. Healthy profit margin in the lottery segment and a boost in gaming profitability contributed to adjusted earnings per share of $0.43, which came in above the consensus analyst estimate of $0.31.
The company reorganized its business operations around three segments a few years ago that management credited for improving performance. This resulted in improving operating margin based on earnings before interest, taxes, depreciation, and amortization (EBITDA).
Management also returned a record $220 million to shareholders through dividends and share buybacks. This brings the dividend yield to a high 3.43%, which is no doubt putting some support behind the stock at these levels.
Now what
Management noted that customer demand trends remain strong right now. The company expects to reach the upper half of its previous outlook for the full year, with revenue between $4.1 billion and $4.2 billion, and operating margin between 20% and 22%. This would be flat over 2021 revenue of $4.1 billion, but investors are looking ahead to what iSoftBet brings to the table in 2023.
The addition of iSoftBet positions IGT for more growth, as it launches in new markets in Europe and Latin America. Plus, the acquisition adds a profitable software-as-a-service business model to IGT's business that is expected to fuel higher profit margin over the long term.
