Why International Game Tech Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of International Game Technology (NYS: IGT) climbed 11% Thursday after the slot-machine maker authorized a new $1 billion stock buyback program.

So what: Mr. Market loves stock buybacks, as they serve to reduce the number of shares outstanding and, in turn, increase earnings per share and the percentage stake that shareholders have in the company. Given that International Game's announcement comes near the stock's 52-week low and would encompass about a quarter of its float, there's no surprise that investors are looking to get ahead of the big boost in value.

Now what: As part of the program, International Game will repurchase roughly 21 million shares from Goldman Sachs for $400 million next week, with the remaining $600 million to be used over the next few years. "These actions demonstrate the Board of Directors' confidence and IGT's continued dedication to responsible capital deployment," the company wrote in a statement. More important, with the stock still sporting a forward P/E of 12, there might be plenty of upside left even after today's rally.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Goldman. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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