All You Need To Know About The Paddy Power Betfair PLC Stock (PPB)

  • Mar 05, 2019 GMT
  • Team Kalkine
All You Need To Know About The Paddy Power Betfair PLC Stock (PPB)

Overview

Paddy Power Betfair plc works as public online betting and gaming company in the United Kingdom, Australia, Ireland, the United States, and worldwide. The company currently operates across four division: Online, Australia, Retail, and US segments. It offers trade sports betting and pari-mutuel betting items; online games and casino; fixed odds games betting; peer to peer games; including on the web bingo and poker, and B2B services. It gives sports wagering and gaming administrations through paddypower.com, betfair.com, sportsbet.com.au, tvg.com, and us.betfair.com Websites under the Paddy Power, Betfair, Sportsbet, and TVG brand names, just as through a chain of authorised wagering workplaces. 

Key Management

  • Gary McGann is the Chairman
  • Peter Jackson is the Chief Executive Officer
  • Jonathan Hill is the Chief Financial Officer

Segment by Geographical Division

The Company's Online (ex-Australia) administrations are conveyed mainly through the Internet, telephone through the public telephony system and UK Retail and Irish Retail through authorised bookmaking shop domains. Its Online Australia segment gives sports wagering administrations to Australian clients utilising the Internet with a small proportion utilising the public telephony system. Its UK Retail segment has retail outlets in Great Britain and Northern Ireland. Its Irish Retail segment has retail outlets in the Republic of Ireland.

Financial Highlights – Q3 FY2018 (£, in million)

(Source: Q3 Trading Report, Company Website)

Financial Commentary – (Q3 2018)

  • In Q3 2018, reported revenue surged by 10% to £483 million when compared with the last year data mainly due to the FanDuel acquisition in July 2018, although foreign currency translation had negative impact on the performance.
  • In Q3’18, Online revenue performance accelerated by 15 per cent to £248 million. Sports revenue surged by 11 per cent; sportsbook revenue increased by 17 per cent, and exchange inflated by 1 per cent respectively.
  • Australia performance declined by 2 per cent, due to an unfavourable sports result shown in August (driven by racing, AFL and NRL).
  • USA segment surged by 22 per cent, with an increase in the existing businesses supplemented by $5m of sports wagering net revenue.
  • Retail segment revenue dipped by 4 per cent to £82 million with a 2 per cent machine gaming growth offset by a 6% decrease in the sports revenue segment.
  • Reported EBITDA diminished by 16% to £101m, due to the losses that occurred in the FanDuel fantasy sports brand.

 

Ratios

(Source: TR)

Ratios Commentary

  • The reported gross margin in H1 2018, dipped by 1.4 per cent to 75.8 per cent against 77.2 per cent reported last year.
  • EBITDA margin reported was 25 per cent in H1 FY2018, reflecting a decrease of 1.6 per cent when compared with last year data.
  • Net margin of 10.2 per cent for H1 FY18 stood significantly higher than the industry median of 6.2 per cent, reflecting higher profitability growth as compared to industry performance.
  • Return on equity stood at 2.1 per cent in H1 FY 18, lower than the industry median of 5 per cent.
  • On the liquidity front, Paddy Power liquidity position was higher than the industry median. Current ratio increased in H1 FY 18 as compared to the last year.
  • On the leverage front, the debt-equity ratio was down as compared to the industry median, reflecting company is less leveraged as compared to its peers.

Stock Commentary

  • On 5thMarch 2019, at the time of writing (before market close), Paddy Power Betfair Plc shares were trading at GBp 6,115, up by 0.01 per cent against its previous day closing price.
  • Stock's 52 weeks High and Low is GBp 9,184.90/GBp 5,948.86. The stock was trading 33.42% lower than its 52w High and 2.79% higher than its 52w low.
  • Stock’s average traded volume for 5 days was 127,487.80; 30 days – 241,970.67 and 90 days – 232,978.00.
  • Average traded volume for 5 days was down by 47.31 per cent when compared with 30 days average traded volume.
  • At valuation front, the stock was trading at a Trailing-Twelve-Month (TTM) PE of 19x compared to the industry median of 13.2x.
  • The outstanding market capitalisation was around £78 billion and a dividend yield of 3.35 per cent.

Growth Prospects

In Australia, the company expects the entire year underlying EBITDA, pre-US sports wagering, to be somewhere in the range of £465m and £480m (past direction: £460m to £480m). Recently, the company expected the US sports wagering EBITDA loss to be around £25m in 2018, reflecting marketing investment in New Jersey.

Conclusion

The company has shown an increase in revenue, with the acquisition of an underlying 51% controlling stake in Adjarabet, the market leader in online wagering and gaming in the Georgian market. The current trading levels which indicate the stock movement towards 52-week low, the market can keep a cautious watch on the Paddy Power Betfair stock going ahead.

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