Global sports betting and gaming group Entain (ENT) posted a strong performance for the year to 31 December, delivering operating earnings close to the top end of analysts' estimates.
Full year EBITDA (earnings before interest, taxes, depreciation and amortisation) reached £882 million, close to the top of the guided range.
The shares responded positively, gaining 3% to £16.11.
ONLINE BOOST
Online betting has been a key growth area, which continued in 2021 marking the ninth consecutive year of growth with net gaming revenues up 13%.
US joint venture partner BetMGM contributed net gaming revenues of $850 million, up over five-fold over last year, propelling group revenues 15% higher in constant currencies.
Entain upgraded expectations for US net gaming revenues of $1.3 billion in 2022 and anticipates positive profitability in 2023. The company’s share of losses in 2021 was £160 million.
The company’s long-term ambition is to a leader in the US sports-betting and iGaming (online) market and expects to achieve a 20-25% market share.
NORMALISATION
In-store EBITDA fell 32% to £67 million as a result of government restrictions on movement across Europe.
However, the company said year-end volumes were back to around 90% of pre-pandemic levels.
The retail estate contributed £274 million of EBITDA before the pandemic, and with restrictions easing there is potential for a strong rebound in 2022.
Despite facing tougher online comparatives going into 2022, management said current trading was in line with expectations.
Greg Johnson at Shore Capital commented: ‘We currently forecast FY22 EBITDA building to £1,026m, driven primarily by retail, with modest progress in digital (5% NGR growth) against tough comparatives and a step up in NPD.
‘At the current price of £15.60, we see the market discounting a circa 8x EBITDA multiple for its global platform and a $7bn valuation on BetMGM (100% ownership basis).
‘With the momentum across the group, especially with the rapidly developing market we would see valuations across both discreet channels as compelling.’
TAKEOVER TARGET
Entain has rejected two takeover approaches in the last year. Its US joint venture partner MGM Resorts offered around £13.85 per share and US fantasy sports betting company Draftkings offered around £28 a share.
