After a false start yesterday Aristocrat Leisure Limited (ASX: ALL) shares are trading as much as 4% higher at $13 today, outperforming the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) by some distance.
Today's jump comes on the back of the release of the poker machine manufacturer's impressive half-year results yesterday. Aristocrat Leisure delivered year-on-year revenue growth of 47.4% to just over $1 billion, and statutory net profit after tax growth of 104% to $159 million.
It is worth noting though that these impressive headline results are partly thanks to the US$1.3 billion acquisition of Video Gaming Technologies. As the acquisition closed in October 2014, this is the first half-year in which it has contributed to Aristocrat Leisure's financial performance.
This acquisition could be one of many according to management. Its CEO Jamie Odell revealed that the company will look to target smaller deals in the digital sector that will be accretive to earnings. These acquisitions are likely to be around the $200 million mark, according to reports in the Fairfax media.
This is all part of Aristocrat Leisure's strategy of being a growth share for investors, focusing on building a larger business in the short to medium term.
This strategy appears to be working, judging by analysts' estimates. According to CommSec, analysts have forecast earnings to grow at an average of 40% per annum for the next couple of years. Considering the shares are changing hands at an estimated 22x FY 2016 earnings, I believe they represent good value for money at the moment.
Asides from the strong performance of its businesses, the company could get an additional boost to earnings if the Reserve Bank decides to cut interest rates further. Some believe rate cuts will drive the Australian dollar down to 65 US cents, which will be great for Aristocrat Leisure considering 60% of its revenue derives from North America.
Right now I believe that Aristocrat Leisure is a good investment with far better long-term growth prospects than rival Ainsworth Game Technology Limited (ASX: AGI). The shares appear reasonably priced at the moment and could provide investors with strong returns in the next couple of years.
