The article discusses the risks associated with investing in loss-making companies and highlights the importance of profitability in determining investment opportunities. It mentions International Game Technology (IGT) as an example of a company with both revenues and profits, making it a potentially more attractive investment option. The article then delves into IGT’s earnings per share (EPS) growth over the last year, which experienced a significant increase of 71%. It also mentions the company’s similar earnings before interest and tax (EBIT) margins and solid revenue growth. The article concludes by suggesting that International Game Technology is worth keeping a close eye on due to its impressive earnings growth and large insider ownership.
In today’s investment landscape, there is often excitement surrounding companies that have the potential to reverse their fortunes and become successful. However, many of these companies have no revenue, no profit, and a track record of falling short. Despite these high risks, some investors are still drawn to these speculative investments, even though the chances of them paying off are slim. These loss-making companies tend to consume a significant amount of capital, so investors need to exercise caution and avoid throwing good money after bad.
On the other hand, many investors prefer to focus on companies like International Game Technology (IGT), which not only has revenues but also profits. While IGT may not be the best investment opportunity available, profitability is a crucial factor in determining the success of a business. Analysing IGT’s growth over the last year, its EPS rose from US$0.78 to US$1.34, an impressive year-on-year growth of 71%. Additionally, the company maintained similar EBIT margins compared to the previous year, but its revenue grew by a solid 4.0% to reach US$4.3 billion.
Given the importance of future prospects in investment decisions, it is worth keeping an eye on IGT. The company’s earnings have experienced significant growth, which could indicate an inflection point for the business. Furthermore, the large insider ownership suggests alignment between the goals of shareholders and management. However, it is important to be aware of the potential risks associated with investing in IGT, as highlighted in the article. Ultimately, IGT’s profitability and insider ownership make it an attractive company to monitor closely.
