In the fast-paced realm of sports betting and online gaming, Flutter Entertainment (LSE: FLTR) stands tall as a colossus, with huge influence across the globe. This giant, with its market cap tipping the scales at a cool £25.2bn, has punters and investors alike perking up their ears. But is this growth stock a jackpot waiting to happen, or a gamble too far? Let’s shuffle the deck and see what hand we’re dealt.
Diverse offering
The company’s portfolio reads like a who’s who of betting royalty. From the cheeky Irish charm of Paddy Power to the more sophisticated allure of Betfair, and the new kid on the block, FanDuel, Flutter’s tentacles reach into every nook and cranny of the betting world.
If Flutter were a poker player, its American expansion would be the ace up its sleeve. As the US gradually sheds its restrictions on sports betting, the brand is positioning itself to be a key player. As many sectors have seen in the past, if success can be found in the US, it can be a real gold rush.
Positive outlook
The firm’s financials read like a tale of two casinos. On one side, we have a whopping £9.63bn in revenue – enough to make any bookie’s eyes water. On the flip side, a £1.03bn loss looms like a bad beat. But management appear to be doubling down on marketing and tech in its American adventure. This may pay off, but also might be a very expensive mistake if issues with regulation or demand emerges.
As an investor though, here’s where I think it gets juicy. Despite its fairly flat recent performance over the last year, the shares might just be sitting nicely in bargain range.
Based on a discounted cash flow (DCF) calculation, the shares are currently trading at a 36% discount to estimated fair value. It’s far from a guarantee as the sector develops globally, but it could be a decent opportunity for those with the right tolerance for risk.
Regulation fears
As I noted, I’m most worried about potential regulatory hurdles here. Any sudden intervention from regulators in a key market to curb activity could be disastrous for the company. Competition in this industry is also fiercer than a high-stakes poker game, with margins under constant pressure. Any slip up from management, or if another key player seizes market share, and there could be really bad news for investors.
One to watch
Clearly, Flutter Entertainment is not for the faint-hearted investor. It’s a high-roller’s dream – a cocktail of established success and tantalising potential, with a dash of risk to keep things spicy. The upcoming earnings report on 13 August 2024, could be the next spin of the wheel that determines what’s next for investors.
I’d be willing to roll this dice with this growth stock for the right price, so with some potential undervaluation, I’ll be buying next time I have some cash free.
The post This growth stock could be my new favourite appeared first on The Motley Fool UK.
Should you buy Flutter Entertainment Plc shares today?
Before you decide, please take a moment to review this first.
Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.
It’s called ‘5 Stocks for Trying to Build Wealth After 50’.
And it’s yours, free.
Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.
And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.
That’s why now could be an ideal time to secure this valuable investment research.
Mark’s ‘Foolish’ analysts have scoured the markets low and high.
This special report reveals 5 of his favourite long-term ‘Buys’.
Please, don’t make any big decisions before seeing them.
Claim your free copy now
More reading
Is BT Group a stock market gem at 138p?
8.4% dividend yield! Here’s one of my favourite cheap FTSE 100 shares for passive income
The BT share price soars 6%+ as Bharti becomes its largest shareholder! Time for me to invest?
Buying 7,629 great value Tesco shares would give me an income of £1,000 a year
With their 5.3% yield, are NatWest shares too good to pass up?
Gordon Best has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
