Is This Gaming Stock Trending - Team17 Group PLC (TM17)?

  • Feb 25, 2019 GMT
  • Team Kalkine
Is This Gaming Stock Trending - Team17 Group PLC (TM17)?

Business Overview

Team17 Group PLC (TM17) creates video games label for independent developers across the world. The organisation designs and distributes games over different stages. Its portfolio operates around 90 games, including the Overcooked, Worms franchise, and The Escapists. The company was earlier known as Team 17 Group Limited and established in 1990; headquartered at Wakefield, the United Kingdom. The Company share trades on the London Stock Exchange (LSE: TM17) and a part of the FTSE 100 index. 

Key Management:

  • Debbie Bestwick MBE, Chief Executive Officer
  • Chris Bell, Non-Executive Chairman
  • Penny Judd, Non-Executive Director
  • Jo Jones, Chief Financial Officer

Financial Highlights - H1 FY2018

(Source: Interim Reports, Company Website)

Financial Commentary (June 2018)

  • The company reported revenue of £15,439 thousand for H1 FY18, a surge of 48 per cent as compared to the last year, mainly because of the increase in digital segment business across the USA & Canada, Europe (Excl. UK) and Rest of the world in the first half.
  • In H1 FY18, operating profit was down by 49.5 per cent to £1,324 thousand as compared to £2,620 thousand reported last year.
  • In H1 FY18, net loss attributable to shareholders reported for the period was £448 thousand as compared to £574 thousand reported last year. It reflects negative performance in the first half of the financial year 2018.
  • The company has reported negative basic and diluted EPS of £41 pence in H1 FY18. However, adjusted earnings per share stood at £1.93 pence for H1 2018 (H1 2017: £0.56 pence).
  • Shareholders equity reported in H1 FY18 increased by £43,909 thousand to £51,353 thousand as compared to £7,444 thousand reported in FY 2017.
  • Cash and cash equivalents reported in H1 FY18 were £13,423 thousand (FY 2017: £8,440 thousand).

Ratios

(Source: TR)

Ratio Commentary

  • EBITDA margin reported was 38.9 per cent in H1 FY 2018, reflecting a decrease of 3.2 per cent when compared with last year data.
  • Negative Net margin of 2.9 per cent for H1 FY18 stood significantly lower than the industry median of 7.7 per cent, reflecting weaker profitability growth as compared to industry performance.
  • On the liquidity front, Team17’s liquidity position was higher than the industry median. Current ratio increased in H1 FY 18 as compared to the previous six months data.
  • On the leverage front, the debt-equity ratio was nil as compared to the industry median, reflecting nil debt financing option implemented by the company and remained debt free in H1 FY18.

Market Dynamics

The games market has seen remarkable development in recent years, determined by advances in innovation. Digital distribution has made it simpler for independent developers to launch games to a broad market. Also, gaming improvement apparatuses are now more open to engineers, and the pattern of crowdfunding has empowered indie developers to raise financing to change over plans to the real world.

Team17’s team remained focussed on the indie market. In H1 2018 alone, there have been more than 4,000 games launched on Steam, leading digital circulation platform.

Share Price Commentary

  • On 22nd February 2019, Team17 share closed at GBp 195.20, decreased by 2.40 per cent against its previous day closing price.
  • Stock’s 52 weeks High and Low is GBp 295.00/GBp 175.00. At the closing price, the share was trading 32.20 per cent lower than its 52w High and 14.29 per cent higher than its 52w low.
  • From the previous three months, Team17 share price declined significantly by 6.98 per cent.
  • Stock’s average traded volume for 5 days was 99,313.60; 30 days – 141,270.97 and 90 days – 125,883.50.
  • Average traded volume for 5 days declined by 29.70 per cent when compared with average traded volume for 30 days.
  • On the valuation front, the stock was trading at a trailing twelve months PE multiple of 25.6x as compared to the industry median of 9.9x.
  • The company’s stock beta was 0.31, reflecting relatively less volatility as compared to the benchmark index.
  • Total outstanding market capitalization was around £262.58 million.

Conclusion

With stronger growth strategic initiatives via positive momentum in the indie games market, we can expect consistent growth performance for the shareholders in the coming quarters. The company has undertaken a mega-successful IPO and has invested in both commercial and creative talent. Given the current trading levels which indicate the stock movement towards 52-week high, the market can keep a watch on Team17 stock going ahead.

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