In morning trade the Aristocrat Leisure Limited (ASX: ALL) share price has climbed almost 3% to $24.26 following the release of the gaming technology company's full-year results and plans for another major acquisition.
Here are the key takeaways from today's release:
- Revenue of $2,453.8 million, up 15.3% on the FY 2016.
- EBITDA of $1,001.2 million, up 24.2%. EBITDA margin increased from 37.9% to 40.8%.
- NPATA of $543.4 million, up 36.5% on last year.
- EPSA of 85 cents, up 36.2% year-on-year and well ahead of the 81.1 cents per share market consensus estimate.
- Total dividends per share of 34 cents, up from 25 cents in FY 2016.
- Plans to acquire social gaming company Big Fish Games for a total consideration of US$990 million in cash.
- Outlook: Continued growth in FY 2018.
Overall I thought this was another outstanding result from Aristocrat Leisure and goes some way to justifying its impressive share price performance in 2017.
The star of the show once again was its digital segment. Revenue in the segment grew 41.2% year-on-year thanks to the perfect combination of growth in user numbers and average revenue per user.
According to the release, daily active users increased 36.3% to 1,729,859 and average revenue per user increased 26.2%.
I expect the acquisitions of Plarium, which recently closed, and Big Fish Games will drive these metrics higher in FY 2018.
In fact, the acquisition of Big Fish Games will mean Aristocrat Leisure becomes the second largest social casino publisher globally by revenue.
Although it doesn't come cheap at 11.9x EBITDA, I believe its strong portfolio of games and equally strong pipeline of future releases will make this acquisition look cheap in a few years. Especially given how quickly the mobile and social gaming industry is growing.
Should you invest?
I think that Aristocrat Leisure is one of the best buy and hold investment options on the market today thanks to its digital business.
Its shares may be trading at a premium to the market average, but I feel its long-term growth potential more than justifies its shares trading at 28x full-year EPSA and would suggest investors buy it instead of struggling rival Ainsworth Game Technology Limited (ASX: AGI).
