Interactive Investor

ii view: Ladbrokes owner Entain focused on diverse growth

11th April 2022 15:07

Keith Bowman from interactive investor

A recovery in high street betting following the pandemic and a strong position in the US. We assess prospects. 

First-quarter trading update to 31 March

  • Total group Net Gaming Revenue (NGR) up 31%
  • Online NGR down 8% 
  • Retail up strongly year-on-year due to closures in the prior year

Chief executive Jette Nygaard-Andersen said: 

"We have started the year with a good performance across all areas of our business, driven as ever by the strength of our industry-leading platform. We have delivered strong performances in all of our major markets, and I am pleased to report that Retail is performing well with customers returning for our instore experience.”

ii round-up:

Entain (LSE:ENT) is a major sports-betting and gaming company operating both online and on the High Street.

Its brands include Ladbrokes, bwin, Coral, Sportingbet, Gala, BetMGM and PartyCasino. 

The FTSE 100 constituent is tax resident in the UK with licenses in a total of 31 regulated or regulating markets. It operates in the USA via a 50/50 joint venture with MGM Resorts International (NYSE:MGM)

For a round-up of these latest results, please click here

ii view:

Formerly GVC Holdings, Entain today employs over 23,000 people. The UK generates its biggest slug of sales at around 46%. Europe then follows at around a quarter, with the balance coming from Australia and Italy at around a tenth each and the rest of the world the balance. 

Early in 2021, Entain rejected an all-share $11 billion offer from BetMGM co-partner MGM Resorts on the grounds that it significantly undervalued the company. A bid from US rival DraftKings (NASDAQ:DKNG) was also made later in 2021 but subsequently withdrawn.

For investors, problem gambling remains an issue for the wider industry. Potential increases in both UK and overseas gaming regulations could be seen going forward such moves already recently seen in Germany. More favourably, diversity in its product and brands is further boosted by its geographical footprint, while its BetMGM joint venture is firmly established as the number two US operator. In all, while some caution looks sensible given regulatory concerns, long-term fans of the company are likely to remain optimism.

Positives: 

  • Diversity of business type and geographical locations
  • Retail back to within 5% to 10% of pre-pandemic levels

Negatives:

  • Increased regulation
  • Potential target for raised government taxes globally

The average rating of stock market analysts:

Strong buy

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