Aristocrat share price: what’s the outlook following interim results?

Aristocrat Leisure share price

Gaming company Aristocrat Leisure (ticker: ALL) delivered another strong set of results as part of its interim report, released Monday, revealing slighlty lower revenue but better margins and post-tax profits.

Investors bid the stock higher – if just a little – in response, with the Aristocrat share price rising over the last three sessions. ALL last traded at $41.12 per share, trades on a 62x earnings multiple and his risen ~30% YTD.

Below we breakdown the highlights from the H1 as well as look at the company’s current outlook.

Interim results in focus

On the top-line, Aristocrat said its revenue declined slightly in the half ending March 31, dropping 1% to come in at $2,229 million. Management lauded this only minor decline in the face of Covid-19 headwinds and foreign exchange fluctuations. And impressively, 80% of group revenues were derived from recurring sources.

Indeed, despite that revenue performance, on a normalised basis, the company reported growth across all key earnings metrics, including EBITDA, NPAT and EPS.

The gaming company saw EBITDA move up 6% to $750.3 million, while EBITDA margins crept up 2.3 percentage points, to 33.7%.

This flowed onto the bottom-line, with profits (NPAT) coming in at $362.2 million, an increase of 18.6%, while earnings per share (EPS) on a fully diluted basis came in at 56.8 cents per share. Finally, the company reported normalised post-tax profits of $411.6 million, a result that management said was 'largely driven by growth in Digital.'

The company also reported an interim dividend of 15 cents per share. Aristocrat did not pay an interim dividend in 2020.

The outlook

Looking forward, management said it was poised to record strong growth for the full-year, barring no changes in the current economic climate or industry conditions.

Some specifics were given, such as the expectation of continued growth across digital books, with it being noted that 'UA spend expected to be modestly above the historical range of 25% and 28% of overall Digital revenues.'

The company also said that it expected an effective tax rate of between 24-25% in FY21.

CEO and MD, Trevor Croker, commenting on the outlook for the company, said:

'We expect uncertain and volatile conditions to continue near term, and we are closely monitoring key factors including consumer sentiment and Gaming venue patronage.''

'Nevertheless, we enter the second half of fiscal 2021 with excellent momentum, resilience, and confidence with a strong balance sheet to continue to invest organically to grow share and accelerate growth through M&A in line with our rigorous criteria.'

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