ii view: US behind momentum at Ladbrokes firm Entain
Owning familiar brands such as Ladbrokes and Corals but also now a key force in a US focused betting company. Keith Bowman looks at prospects.
23rd May 2025 15:35
by Keith Bowman from interactive investor
First-quarter trading update to 31 March
- Total currency adjusted groupwide Net Gaming Revenue (NGR): including 50% share of BetMGM1, up 11%
- Online currency adjusted NGR, excluding the US, up 10%
Guidance:
- Continues to expect full-year currency adjusted growth in Online NGR in the mid-single-digit percentage region
- Targeting the generation of over £0.5 billion of annual cashflow in the medium term
Chief executive Stella David said:
"We have made a strong start to 2025. Our improving operational execution saw us exit 2024 with clear momentum which has continued in Q1.
"Entain has a clear and compelling strategy with today's results further evidence of its delivery. We are in the early stages of our journey of improvement and are driving ahead at pace.”
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ii round-up:
Sports-betting and gaming company Entain (LSE:ENT) operates both online and via the high street.
Entain’s sporting related betting brands include Ladbrokes, Coral, bwin and Sportingbet. Gaming related brands take in CasinoClub, Foxy Bingo, Gala and PartyCasino.
A constituent of the FTSE 100 index and a tax resident in the UK, the company has licenses in over 30 regulated or regulating markets. Entain also operates in the USA via a 50/50 joint venture with MGM Resorts under the BetMGM brand.
For a round-up this latest trading update announced on 29 April, please click here.
ii view:
With Ladbrokes' history dating back to 1886, Entain today employs over 30,000 people. Competing against rivals such as Paddy Power owner Flutter Entertainment (LSE:FLTR) and William Hill owner Evoke (LSE:EVOK), it operates more than 20 operational offices around the world. Geographically, the UK and Ireland generated most sales in 2024 at 40%. That was followed by Europe and including Croatia, Poland, Belgium and the Netherlands at 27%, Australasia 11%, the rest of the world 11%, and Italy 10%.
For investors, problem gambling for some customers and a potential tightening of government regulations remains a concern. Adverse sporting results hindering profit margins can impact business, with 2024’s football Euros potentially providing tough comparatives in 2025. Intense competition within its targeted US market is not to be dismissed, while group net debt of £3.33 billion as of late December compares to a stock market value of £4.6 billion.
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To the upside, BetMGM moved to an adjusted profit (EBITDA) during this latest quarter from a previous loss-making position. The now appointed CEO Stella David should help Entain focus on reinvigorating growth initiatives. Cost savings of £100 million continue to be targeted to 2026, while a forecast dividend yield of around 2.7% compares to no payout at major rival Flutter.
In all, and despite continued risks, a consensus analyst fair value estimate above 950p per share appears to point towards current longer-term optimism in the City.
Positives:
- Diversity of business type and geographical locations
- Paying a dividend (not guaranteed)
Negatives:
- Uncertain consumer outlook
- Potential for increased regulation
The average rating of stock market analysts:
Buy
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