Why International Game Technology Stock Jumped Higher Today

Because International Game Technology shares are up today

what happened

Shares of International Game Technology (NYSE: IGT ) were up 16.7% at 11:31 a.m. ET Tuesday after the company reported better-than-expected third-quarter earnings.

The company reported accelerating revenue and profit growth, which is good news for investors facing a nearly six-month slide in share prices due to lower growth expectations.

So

IGT has completed the acquisition of iSoftBet, a leading gaming content provider, which helped boost the company's revenue for the quarter. Healthy profit margins in the lottery segment and improved gaming profitability contributed to adjusted earnings per share of $0.43, beating analysts' consensus estimate of $0.31.

A few years ago, the company reorganized its business operations into three segments, which management says led to increased productivity. This resulted in an increase in operating margin based on earnings before interest, taxes, depreciation and amortization (EBITDA).

Management also returned a record $220 million to shareholders in the form of dividends and stock buybacks. This pushes the dividend yield to a high of 3.43 percent, which certainly provides support for stocks at these levels.

And now

Management noted that consumer demand trends currently remain strong. The company expects to hit the top half of its previous full-year forecast with revenue between $4.1 billion and $4.2 billion and operating margins of 20% to 22%. With revenues of $4.1 billion in 2021, that will remain unchanged, but investors can't wait to see what iSoftBet brings to the table in 2023.

The addition of iSoftBet ensures IGT's continued growth as it expands into new markets in Europe and Latin America. Additionally, this acquisition will add a profitable business-as-a-service business model to IGT's business model, which is expected to drive long-term earnings growth.

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John Ballard has no positions in any of the titles mentioned. The Motley Fool has no positions in any of the securities mentioned. The Motley Fool has a disclosure policy.