Aristocrat Leisure Limited (ALL) – On a roll

Aristocrat Leisure Limited is a gaming content, hardware and technology company in Australia and internationally. It operates through three segments: Gaming, Pixel United, and Interactive. Aristocrat Leisure was founded in 1950 and is headquartered in North Ryde, Australia.

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Aristocrat Leisure (ALL) posted FY24 operating earnings slightly ahead of consensus, as US game installations came in ahead of company guidance, while year-on-year (YoY) EPS rose an impressive 20%. Overall, the result showed another strong performance from the electronic gaming machine (EGM) and social casino group, and provides a solid foundation for further stellar growth in EPS, even accounting for the impact of the US$620 million ($955 million) sale of its Plarium Global mobile gaming business.

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Ord Minnett sees increased revenue from the participation market as central to the case for EPS growth. This market now accounts for circa 50% of Aristocrat’s earnings before interest and tax (EBIT). We also expect EPS to be boosted by a rising share of the ship-share segment.

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Post the result and incorporating the sale of Plarium, we have raised our EPS estimates for FY25 by 1% for FY25 and by 3% for FY26 and FY27. This leads us to raise our target price to $72.00 from $59.00, while we maintain our Accumulate recommendation.