ii view: seems like nothing can stop Flutter Entertainment

This FTSE 100 gaming giant is up by more than 40% year-to-date, comfortably outperforming the wider index. We assess prospects. 

Full-year results to 31 December

• Revenue up 27% to £7.69 billion
• Pre-tax loss of £275 million, improved from previous year’s loss of £288 million
• Adjusted profit (EBITDA) up 4% to £1.04 billion
• No final dividend payment
• Net debt of £4.6 billion, up from £2.6 billion

Chief executive Peter Jackson said:

“2023 is off to a pleasing start driven by positive momentum from the end of last year. With our combined US business on track to deliver a positive EBITDA for the full year 2023 for the first time, the Group is currently at an earnings' transformation point and we look forward to delivering future growth and progressing further against Flutter's strategic priorities in the coming year."

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ii round-up:

Flutter Entertainment (LSE:FLTR) is a UK and overseas sports-betting and gaming company that operates via four divisions.

Its US business generates its biggest slug of sales at around a third, with brands including FanDuel, FOX Bet and PokerStars. Its UK & Irish business accounts for just under 30% of sales, running brands for its websites and betting shops including Sky Betting & Gaming, Paddy Power, Betfair and tombola. The Australian division generates around 16% of sales mostly online via its Sportsbet brand. 

Finally its remaining International division accounts for the balance of sales at just over a fifth. Here. its largely website brands include PokerStars, Betfair International, Adjarabet, and Junglee Games in India, along with betting outlets in Italy under the Sisal banner.  

For a round-up of these latest results released on 2 March, please click here.

ii view:

Flutter was formed from the merger of Paddy Power, Betfair and The Stars Group between 2016 and 2020. Today, its UK stock market value of over £20 billion exceeds rivals Entain (LSE:ENT), Playtech (LSE:PTEC), Rank Group (The) (LSE:RNK) and 888 Holdings (LSE:888), all at comfortably under £10 billion. Sports betting generates most of the company's sales at just over three-fifths, with gaming products making up the balance.

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For investors, potentially increased regulation cannot be forgotten. The UK government’s Gambling Act Review White Paper is keenly awaited, while problem gambling remains an issue both in the UK and overseas despite industry initiatives. Group net debt has risen given recent acquisitions, no dividend is being paid unlike some rivals, while Flutter overall continues to report losses.  

On the upside, management continues to forecast an adjusted profit for its biggest US business, estimating that the US addressable sports betting and iGaming market will increase from $9 billion in the 12 months to June 2022 to over $40 billion by 2030. Both diversity of product and geographical region are enjoyed, a potential additional US listing could further shine a spotlight on this growth division, while other markets such as its previous move into India via Junglee Games also warrant consideration.   

Flutter shares are up 49% over the past year and, despite the current turmoil in global financial markets, are up 22% in 2023 so far compared with a 2% decline for the FTSE 100.

For now, and while some caution is always sensible, sizeable opportunities for future growth are likely to keep more speculative long-term investors onboard. 

Positives: 

• Diversity of both business type and geographical location
• Growing in the USA

Negatives:

• Potentially increased government regulation
• No dividend payment

The average rating of stock market analysts:

Buy