Poker machine giant ALL has already advanced +14% in 2024, helped by its positive correlation to the Tech Sector. Following its report last November, this gaming company doesn’t confess its sins until May, but the markets are clearly voting with both feet that the news will be good. Their FY23 results were solid, with revenue up 13% to $6.3b and Segment EBITA up 4% to $2,750m, at the time both slightly ahead of expectations. Guidance of earnings growth was provided, but no further specifics, the standard for Aristocrat at full-year results.
We think ALL can continue to grow earnings at mid-single digits, amplified by share buybacks (i.e., fewer shares on issue) while enjoying a net cash position, even after completing the $1.5bn acquisition of Nasdaq-listed gaming software giant NeoGame. We like this move into the US online lottery solutions market, putting ALL in a solid position to gain a larger slice of this nascent industry – a pleasant change to see an ASX company “shopping” overseas.
- We like the medium-term direction of ALL and can see another test of $50 in 2024.
MM is bullish toward ALL
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