FLTR LN

Publicly traded companies mentioned herein: Flutter Entertainment PLC (FLTR LN), Fox Corporation (FOXA), GVC Holdings PLC (GVC LN), Stars Group Inc/The (TSG), William Hill PLC (WMH LN)

Highlights

The presenter is long shares of Flutter Entertainment PLC (FLTR LN), formerly Paddy Power Betfair, the UK-based global sports betting and gaming operator. The company was comprised of business in the UK, Ireland, Australia, and the United States. He finds the opportunity in the US particularly appealing, as the market recently opened up to legalized sports gaming and FLTR quickly gained strong reach in key states through its 65% stake in FanDuel. Though he already thought the US opportunity was undervalued by UK analysts, he became increasingly bullish following the October 2, 2019 announcement that FLTR would acquire The Stars Group Inc (TSG) in an all-share merger. Using consensus numbers, the presenter estimates that the proforma company will generate 2021 EPS of £5.76 including most synergies (with additional upside due to cost-saving synergies). That equates to a ~14x P/E multiple, but he views cost-savings synergies as likely, bringing the implicit P/E multiple down to <12x. Considering his expectation that FLTR will be the dominant player in the US (as well as the UK, Australia, Germany, Italy, and Spain) at that time while still growing 15% – 16%, he finds FLTR to be undervalued.