FDJ
Note: This is a daily stock update and the information stands true as of 18/10/24, 09:00 CET.
Company Update:
Expert Opinion:
The miss on consensus is in my view misleading and the change in consolidation means that the consensus was probably all around the place. The underlying performance is better and that is what matters. I still very much like FDJ which offers a very strong defensive profile in this environment and I think valuation is really attractive. Unfortunately, I suspect the government will be tempted to increasingly tax the sector, which makes it a riskier bet than it should be. I am therefore less enthusiastic on the name than I used to. I thought Entain was a better stock to invest in (lower valuation, recovery underway, significant presence in the US) but it seems the UK government could also raise tax on the sector. Yet, I am still a buyer of both stocks as I believe this is now already well flagged.
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Company Update:
Q3 24 revenue came in at €669m, up 8% on a LFL (Like for Like) basis and 14.2% on a reported basis. This was driven by a 10% rise in lottery revenue and 2.1% growth in ancillary services, which made up for a flat showing in 'sports betting and online gaming open to competition'. Note that is is a 2% miss vs consensus.
FY guidance upgraded: FY growth now expected at 9% (5% LFL) with EBITDA margin at 25% vs 24.5% previously. With Kindred, reported growth expected at 16% with EBITDA at 25%.
We will upgrade our estimates (albeit slightly) to take these into account.
Expert Opinion:
The miss on consensus is in my view misleading and the change in consolidation means that the consensus was probably all around the place. The underlying performance is better and that is what matters. I still very much like FDJ which offers a very strong defensive profile in this environment and I think valuation is really attractive. Unfortunately, I suspect the government will be tempted to increasingly tax the sector, which makes it a riskier bet than it should be. I am therefore less enthusiastic on the name than I used to. I thought Entain was a better stock to invest in (lower valuation, recovery underway, significant presence in the US) but it seems the UK government could also raise tax on the sector. Yet, I am still a buyer of both stocks as I believe this is now already well flagged.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach out to us at sales@alphavalue.eu
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Alphavalue Morning Market Tip
Solid start of 2025 with signs of recovery in key markets.