Stride Gaming PLC (LON:STRST) has a clear focus on online bingo and soft gaming and is growing rapidly, with FY16 l-f-l revenue up 22%. The acquisitions of Tarco and 8Ball at the end of FY16 doubled its share of the UK bingo-led market from 5% to 10% and should deliver material synergies from FY17. Our unchanged FY17 estimates are for 11% EPS growth and strong cash generation. We expect organic growth to be augmented by further accretive acquisitions in due course. Stride’s FY17 P/E is 10.3x and the calendarised EV/EBITDA is only 7.1x, implying considerable share price upside potential.
Standing out in a competitive market
Stride is led by an extremely experienced management team and its above average growth in a competitive market reflects its highly analytic data-driven approach and multi-brand strategy. FY16 real money gaming player numbers increased by 37%, with yields per player up 7%, while social gaming daily average revenue per playing user increased by 22%. Focused entirely on regulated markets, with 85% of FY17e revenues arising in the UK, Stride has taken advantage of opportunities presented by the introduction of the UK POC gaming tax in December 2014, which has squeezed smaller operators and left larger multi-product operators focusing more on sports, casino and M&A than on bingo.
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