Playtech may not warrant the go-go valuations of its US peers – where deregulation has led to bumper profits – but it isn’t worth just seven times current year profits, The Sunday Times’s Jim Armitage argued.
In particular, the tipster highlighted the company’s focus on “gaming-mad” Latin America.
Aside from the direct sales and service fees obtained in the region, it sometimes also earned share options in its cliente. The latter alone rose to £255m in value over the the past half year.
The company also recently offloaded its Finato unit for $250m (£185m), removing what Armitage termed a “sponge” from the balance sheet, due to the “hefty” capital requirements required for financial betting.
Its Italian operations also looked primed for a turnaround.
Furthermore, Playtech’s boss, Brian Mattingley was an “experienced hand”, “albeit having blotted his CV at the collapsed Football Index,” Armitage said.
“Buy.”
The Financial Mail on Sunday’s Midas column recommended readers buy shares of Mitchells&Butlers, pointing out the pub owner’s strengthened balance sheet and recent strong trading.
A discounted £350m fundraising was a bitter pill for investors to swallow but the company’s improved financial position may now allow it buyout rivals that fail to get ahead during the new normal.
As for M&B’s current trading, sales had jumped to 104% of their pre-pandemic level over the preceding eight weeks.
Analysts at Peel Hunt meanwhile have pointed out that the company’s valuation is at an all-time low, despite having pared its debt by £64m in the last two months and now higher profit estimates.
One potential fly in the ointment is that Odyzean and horseracing owners JP McManus and John Magnier now own more than half the business, and recent votes have left the other investors feeling like they are at the back of the queue.
“It’s something to consider before you decide whether or not to get a round in,” the tipster concedes.
“If you can cope with the wishes of the majority shareholder, and take a glass-half-full view about the hospitality industry’s ability to recover, the shares are worth a sip.
“Buy.”
