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GuruFocus has detected 5 Warning Signs with International Game Technology PLC $IGT.
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International Game Technology PLC (NYSE:IGT)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

International Game Technology PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.

IGT' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 6

4
8

During the past 13 years, the highest Piotroski F-Score of International Game Technology PLC was 8. The lowest was 4. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Net Income was 72.696 + -1.903 + 233.318 + -54.79 = $249 Mil.
Cash Flow from Operations was 318.202 + 97.19 + 340.89 + 283.668 = $1,040 Mil.
Revenue was 1285.469 + 1265.65 + 1321.216 + 1152.584 = $5,025 Mil.
Gross Profit was 502.997 + 503.713 + 500.327 + 413.954 = $1,921 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(14930.485 + 15409.166 + 15295.15 + 15060.162 + 14931.174) / 5 = $15125.2274 Mil.
Total Assets at the begining of this year (Mar16) was $14,930 Mil.
Long-Term Debt was $7,331 Mil.
Total Current Assets was $2,367 Mil.
Total Current Liabilities was $2,835 Mil.
Net Income was -116.89 + 7.132 + 73.501 + -92.774 = $-129 Mil.

Revenue was 1274.284 + 1201.573 + 1364.957 + 1281.561 = $5,122 Mil.
Gross Profit was 480.392 + 453.963 + 510.634 + 511.022 = $1,956 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(8283.293 + 16203.289 + 15818.375 + 15114.692 + 14930.485) / 5 = $14070.0268 Mil.
Total Assets at the begining of last year (Mar15) was $8,283 Mil.
Long-Term Debt was $8,228 Mil.
Total Current Assets was $2,400 Mil.
Total Current Liabilities was $2,087 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

International Game Technology PLC's current net income (TTM) was 249. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

International Game Technology PLC's current cash flow from operations (TTM) was 1,040. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Mar16)
=249.321/14930.485
=0.01669879

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=-129.031/8283.293
=-0.01557726

International Game Technology PLC's return on assets of this year was 0.01669879. International Game Technology PLC's return on assets of last year was -0.01557726. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

International Game Technology PLC's current net income (TTM) was 249. International Game Technology PLC's current cash flow from operations (TTM) was 1,040. ==> 1,040 > 249 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Mar17)=Long-Term Debt/Average Total Assets from Mar16 to Mar17
=7331.266/15125.2274
=0.48470451

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=8227.845/14070.0268
=0.5847782

International Game Technology PLC's gearing of this year was 0.48470451. International Game Technology PLC's gearing of last year was 0.5847782. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Mar17)=Total Current Assets/Total Current Liabilities
=2366.82/2835.055
=0.83484095

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=2400.405/2087.309
=1.14999983

International Game Technology PLC's current ratio of this year was 0.83484095. International Game Technology PLC's current ratio of last year was 1.14999983. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

International Game Technology PLC's number of shares in issue this year was 202.5. International Game Technology PLC's number of shares in issue last year was 200.4. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=1920.991/5024.919
=0.38229293

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1956.011/5122.375
=0.38185627

International Game Technology PLC's gross margin of this year was 0.38229293. International Game Technology PLC's gross margin of last year was 0.38185627. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Mar16)
=5024.919/14930.485
=0.3365543

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=5122.375/8283.293
=0.61839838

International Game Technology PLC's asset turnover of this year was 0.3365543. International Game Technology PLC's asset turnover of last year was 0.61839838. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+0+0+1+0
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

International Game Technology PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

International Game Technology PLC Annual Data

Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 111101
Question 2 111111
Question 3 110001
Question 4 111111
Question 5 101101
Question 6 010010
Question 7 110100
Question 8 010101
Question 9 110110
F-score 784746

International Game Technology PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1000001111
Question 2 1111111111
Question 3 0000001111
Question 4 1111111111
Question 5 1100001111
Question 6 0011110000
Question 7 1100000000
Question 8 1111011111
Question 9 1011110000
F-score 7555456666
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