Why Ainsworth Game Technology Limited looks a stock at bargain prices

The share price of Ainsworth Game Technology (ASX:AGI) has been smashed recently, making now a great time to buy shares in this quality growth stock.

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Ainsworth Game Technology Limited (ASX: AGI) is down a huge 30% over the past 12 months, falling from a high of $4.80 in October 2013 to $2.97 today. The fall in the share price is on the back of the company's FY14 full-year result which disappointed the market, this is despite Ainsworth increasing net profit by 18% and sales revenue by 23% compared to FY13.  Following the sell-off, the shares look cheap.

Ainsworth has an impressive history of financial performance in recent times, growing net profit from $15 million in 2011 to $82 million in FY14, while sales growth has been equally as impressive rising from $45 million in 2009 to $244 million in FY14.

Ainsworth is one of the top three players within the Australian market and holds key regulatory licenses in Australia. Analysts at Morningstar have stated that Ainsworth's share of gaming floor product in the two key markets of New South Wales and Queensland has increased from 10% in 2012 to 15% today. This growth looks set to continue to increase in the relatively mature Australian market.

However, Ainsworth is currently experiencing huge growth internationally, and as at 30 June 2014 had 163 jurisdictional licenses. International revenue increased by 37% for FY14 and international revenue now makes up 41% of the company's total revenue.

Impressively, profit in Latin America increased by a whopping 139%. Furthermore, total gaming machines installed in the Americas increased to over 1,900, up 72% on the previous year and the company recently acquired 24 acres of land in Las Vegas to continue its expansion plans in America. Ainsworth expects the Las Vegas facility to be completed in FY16.

Ainsworth expects further strong revenue growth in FY15, and with the shares trading on only 15 times FY14's earnings, Ainsworth is cheap. Furthermore, Ainsworth has a strong balance sheet with little debt and pays out between 40%-60% of profits as dividends.

Motley Fool contributor Bradley Murphy owns shares in Ainsworth Game Technology mentioned in this article. 

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