AGEM stock index up in September

Oct 15, 2010 9:24 AM

After declining three of the last four months, the Association of Gaming Equipment Manufacturers (AGEM) Index saw its largest increase since April. During the month of September, the composite score of 17 global gaming suppliers rebounded 5.15 points, or 5.86 percent, to 93.04. While the latest movement is positive, it is important to note that the index remains down 20.3 percent from a year ago.

Additionally, the AGEM Index fell short of the gains enjoyed in the broader equity markets as the Dow Jones Industrial Average and Standard and Poor’s 500 Index increased 7.7 percent and 8.8 percent, respectively, during the month of September.

The AGEM Index is largely driven by the performance of slot manufacturers, which has remained relatively weak because many casino operators have reduced their capital expenditures and failed to replace aging slot machines on their floors. 

With the contraction in slot replacements over the last several years, it is inevitable that operators will need to increase their investments in new hardware, at least at some point in the future.

If not solely to remain competitive, within the next two years, many gaming properties will eventually need to begin rotating machines and systems that will have become largely antiquated over what will have been more than three years of downturn.

Selected positive contributors to the index during the month included:

Lottomatica (LTO) adding 1.56 points to the index based on a 4.56-percent increase its stock performance.

Konami (KNM) contributing 1.24 points to the index based on a 10.17-percent gain in its stock valuation.

Selected negative contributors to the index included:

International Game Technology (IGT) posting -0.23 points to the index with a 1.03-percent decline in its stock price.

INTRALOT (INLOT) with its stock price dropping 8.39 percent, contributing -0.07 points to the index.

The AGEM Index

The Association of Gaming Equipment Manufacturers (AGEM) produces the monthly AGEM Index that comprises 17 global gaming suppliers throughout the world. A total of 12 suppliers are based in the United States and are listed on the NYSE, Nasdaq, or AMEX, while two trade on the Australian exchange, one supplier trades on the Athens exchange, one trades on the Milan exchange, and another trades on the Taiwan OTC exchange.

The index is computed based on the month-end stock price (adjusted for dividends and splits) of each company and weighted based on approximation of market capitalization. Market capitalizations for manufacturers trading on foreign exchanges have been converted to US dollar-equivalents as of month-end for comparability purposes. The AGEM Index is based on a 100-point value as of January 2005.