Aristocrat Leisure Limited

Growth in Operating Revenue: Aristocrat Leisure Limited (ASX: ALL) is into manufacturing of gambling machine. The company is predominantly engaged in the development, design & distribution of gaming platform, content, and systems mainly through its North Ryde site. It offers a wide spectrum of products and services which include electronic gaming machine, casino management system etc.

It recently came up with its presentation where it discussed the operating model of the company. It has a comprehensive market segmentation to inform and drive the investment decisions, with cohesive portfolio management, robust pipeline, and active lifecycle management. The company also stated that cost-efficient product development is key to success.


Earnings Summary and KPI (Source: Company Reports)

On the financial front, the operating revenue stood at $3,624.1 million in FY18 compared $2,453.8 Mn in FY17, an increase by more than 47% on the reported basis driven by growth in Americas and ANZ as well as in Digital with organic growth in Product Madness along with two significant digital acquisitions.The company recently came up with its AGM, where it has discussed its financial performance. The normalised NPATA of the company increased by ~34% to $729.6 million in FY 2018 primarily driven by the performance of existing businesses and digital acquisitions.

What to Expect From ALL: The company views 2019 as a year of transition in digital businesses. As per its portfolio strategy and rigorous financial objectives, the company will focus more on fully and successfully integrating the acquisitions, optimising the opportunities of its growing scale and investing in new games. The company wants its digital business growth in line with industry growth rates. It also expects that its FY 2019 results would be skewed to the second half.

Meanwhile, the stock price of the company has risen 7.89% in the past three months but down by 3.43% in the past one month as on March 11, 2019. Currently, the stock is trading at a higher P/E level of 27.82x as compared to the concerned industry. Moreover, the company is having an EV/Sales ratio of 4.6x which is slightly higher than the industry median (Consumer Cyclicals) of 1.0x which reflects that the stock is slightly overvalued. Based on foregoing and volatility in the stock, we have a watch stance on the stock at the current market price of $23.140 per share and we advise to investors that they should wait for the further growth catalysts to drive movement in the stock price.

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