Flutter Entertainment Stock Up 10% in a Month: Should You Buy Now?

Flutter Entertainment plc FLUT recently experienced a sharp increase in its stock price. Over the past month, the company’s shares have gained 9.7%, outpacing the industry’s gain of 7.3%. FLUT has also outshined the S&P 500 and the Zacks Consumer Discretionary sector’s increase of 3.6% and 5.7%, respectively. With its strong momentum, FLUT has firmly established itself as a standout performer, showcasing its resilience and growth potential against market benchmarks.

As of Wednesday, the stock closed at $232.66, below its 52-week high of $252.84 but above its 52-week low of $148. In comparison, other major industry players like DraftKings Inc. DKNG, MGM Resorts International MGM and Boyd Gaming Corporation BYD rose 10%, 8.2% and 4%, respectively, over the past month.

Stock Price Performance

Image Source: Zacks Investment Research

Technical indicators suggest continued strong performance for FLUT. The stock is trading above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in FLUT’s financial health and prospects.

50-Day Moving Average

Image Source: Zacks Investment Research

With Flutter Entertainment’s recent gain, investors are eyeing the stock for a potential breakout that could pave the way for significant upward movement. Let’s dive deeper into the factors driving this upward trend.

Factors Aiding FLUT’s Growth

Flutter completed the migration of FanDuel Casino to its proprietary technology, enhancing platform stability and allowing access to exclusive content. This move boosted engagement and growth in iGaming, with future benefits expected from in-house promotional capabilities.

FanDuel, a key division of Flutter Entertainment, delivered an outstanding second-quarter 2024, securing nearly 40% of the total U.S. sports betting and iGaming market. This commanding market share is driven by the company’s innovative products, bolstered by the Flutter Edge platform. Flutter’s disciplined approach to customer acquisition and strategic investments have been pivotal in strengthening FanDuel’s performance, positioning it as a market leader in the rapidly expanding U.S. online betting industry. The company is benefiting from improved products for major sports like the NBA, WNBA and MLB.

On the other hand, the company continues to witness excellent growth across its brands in the U.K., achieving market share gains for 10 consecutive quarters based on gambling commission data. The company is benefiting from new live casino games like Paddy’s Mansion Heist.

Robust revenue growth outside the United States bodes well for the company. In second-quarter 2024, outside U.S. revenues grew by 10%, aided by market leadership in regions like the U.K., Ireland and Italy.

Story continues

FLUT Long-Term Guidance Boosts Confidence

Flutter Entertainment has outlined an ambitious long-term growth plan. The company projects group revenues of approximately $21 billion by 2027 at a compound annual growth rate (CAGR) of 14%. Adjusted EBITDA is expected to exceed $5 billion, with a 700-bps margin expansion to 25% by 2027. Flutter also forecasts free cash flow generation of around $2.5 billion by 2027, with a remarkable 36% CAGR.

Flutter Entertainment’s management now predicts the total addressable market for iGaming and online daily fantasy sports to grow at an annualized rate of 8% through 2027. By then, global gross gaming revenues are expected to reach a substantial $368 billion, reflecting the strong expansion potential of the industry.

In the United States, Flutter expects FanDuel to continue driving growth at a revenue CAGR of 15-17% by 2027 in existing states, reaching approximately $9.7 billion.  With significant room for expansion, as new states regulate sports betting and iGaming, Flutter aims to maintain its industry-leading 80% sportsbook coverage.

Additionally, the company authorized a share repurchase program of up to $5 billion, set to begin after its third-quarter earnings release in November 2024 and continue over the next three to four years.

Estimate Revision Favoring FLUT Stock

Reflecting the positive sentiment around FLUT, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have raised their estimates for the current and next year by 40.3% to $5.71 and 35.4% to $7.80 per share, respectively.

Image Source: Zacks Investment Research

FLUT Trading at a Premium

The company is currently valued at a premium compared with the industry on a forward 12-month P/E basis. FLUT’s forward 12-month price-to-earnings ratio stands at 31.91, higher than the industry’s ratio of 28.72 and the S&P 500’s ratio of 21.58.

End Notes

Investors should consider buying Flutter Entertainment as the company is experiencing strong momentum, driven by its leadership in the United States through FanDuel, which commands nearly 40% of the U.S. sports betting and iGaming market. This Zacks Rank #1 (Strong Buy) company’s ambitious long-term guidance includes $21 billion in revenues by 2027, a 14% CAGR, and significant margin expansion. Furthermore, FLUT’s robust performance in key international markets, coupled with a $5 billion share repurchase program, makes it an attractive buy despite its current premium valuation.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MGM Resorts International (MGM) : Free Stock Analysis Report

Boyd Gaming Corporation (BYD) : Free Stock Analysis Report

DraftKings Inc. (DKNG) : Free Stock Analysis Report

Flutter Entertainment PLC (FLUT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research