If you are thinking what I'm thinking, you're thinking that Ainsworth Game Technology Limited (ASX: AGI) sounds like a pretty good buying opportunity, aren't you?
And you might be right, if the half-yearly results released in February in any way reflect what's to come at the upcoming full year results presentation.
Here are some stats for the half year ended 31 December, 2013:
Revenue: up 26% to $121.781 million (Australian up 23%, International up 33%).
Profit before tax: up 51% to $45.595 million.
Costs: up 8.3% to $38 million.
Costs as a percentage of revenue: 31%, down from 36% in the pcp.
Although Ainsworth is not your typical income stock or one with high net tangible assets by nature, both of these measures rose during the period as well.
Based on the company's initial forays overseas and recent state licenses in the US, not to mention the prospect of further casino growth in Australia, Ainsworth's prospects going forward look very lucrative indeed.
Revenues in South America were up 380% during the first half, narrowly edging the Australian state of Victoria out of the top slot – it saw growth of 373% in the same period.
Casinos in Australia to be built by companies Echo Entertainment Group Ltd (ASX: EGP) and Crown Resorts Ltd (ASX: CWN) should further contribute to domestic earnings, while increased research and development spending (up 11%) will drive improvement in all markets over future years.
I also expect further approvals in US states combined with new gaming machines to help Ainsworth 'crack' the North American market, earnings from which were largely flat in 1H 2014.
Full year results should be out quite soon and based on Ainsworth's current valuation, I think it looks like a pretty good deal.
At The Motley Fool we're aware of another company trading at a pretty reasonable price given its earnings growth – it's a company I already own, and one I think you might like to have a look at as well.
If you're interested, simply enter your email address in the link below – it takes literally 30 seconds – and we'll send the report to you absolutely FREE!
