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Bookie, William Hill, saw its share price dip by 2.5 per cent after posting disappointing results that showed full-year net revenues were down two per cent year on year.
The bookmakers reported full year net revenues of £1.6 bn and a 37 per cent fall in underlying operating profits to £137m. Its share price now stands at 157.50p at the time of writing. Investors will be particularly disappointed that the betting operator has slashed its dividend by a third to 8p.
So, what are the odds on recovery for William Hill’s stock – could it bounce back?
The bookmaker was hit by the Government’s decision to restrict the maximum stake on in-shop gaming machines to £2 last year, leading William Hill to close 713 of its UK shops. Further regulation is expected to take its toll too – a planned ban on gambling with credit cards could knock as much as £5-10 million off next year’s profits for the betting giant.
The company is targeting overseas growth though with its US expansion gathering pace – revenues rose 38 per cent and it has captured a nationwide market share of 24 per cent. It has also acquired Swedish gambling firm, Mr Green, which should boost its reach across Europe. Hargreaves Lansdown described the firm’s early US growth as ‘very promising’ but cautioned that cracking the market will be no walkover with competitors GVC, Betfair and Paddy Power also scrabbling for market share.
The full year figures were definitely less than impressive with net debt also increasing to £536m but some have pointed out that William Hill still has a forward looking earnings multiple of 14 and an anticipated yield of 4.6 per cent which may still make it worth a punt for long-term growth.
Competitor Flutter, which owns Paddy Power, has also taken a tumble with its share price falling five per cent after it revealed its profit before tax had fallen 38 per cent year on year.
Flutter says it took a £73m hit in taxes after betting tax was hiked in the UK, Ireland and Australia last year. Online revenue was one bright spot for the gambling giant though with revenue growing 18 per cent up from 11 per cent last year. The relaxation of sports betting laws in the US has also boosted Flutter’s revenues – it added 285,000 customers in 2019 and has a 44 per cent online share in the states in which it operates.
Flutter’s proposed merger with Canadian The Stars Group is still under scrutiny from the UK betting watchdog, which has been another blow for the gambling giant although it says it still expects the merger to close in the second or third quarter.
On the surface, Flutter’s results look disappointing, but the consensus seems to be that US growth and online revenues are strong enough to suggest that this could just be a blip.
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