Flutter & DraftKings: Bespoke CEO project
Consumer Discretionary
Paragon Intel is launching a bespoke CEO assessment project on FLUT’s Jeremy Jackson and DKNG’s Jason Robins. While both leaders boast headline achievements, they now confront converging pressures - higher state betting taxes, rising CAC, regulatory scrutiny and complex integrations. With Robins shifting focus towards FCF generation and Jackson tasked with defending FanDuel’s margin edge amid intensifying competition, Paragon will evaluate whether each CEO possesses the capital-allocation discipline, governance model and operating rigour to convert scale into durable profitability. They will also explore how differences in ownership control impact succession, strategic agility and shareholder alignment as the US sports betting market matures.
Edition: 216
- 25 July, 2025
Flutter Entertainment (FLTR LN) UK
Consumer Discretionary
UK tax raid rumours create a buying opportunity - FLTR will be able to weather the impacts through market share gains and cost containment measures. Hedgeye sees the blended tax rate going to ~35% starting next year. The market size will be lower as will the profit pool, but FLTR’s piece of the pie will be bigger in the long term. Anyway, it is not the UK growth story that matters (it will represent <20% of EBITDA by 2026 and well below 20% on a long-term basis) as Hedgeye makes the case that the group’s US business alone is worth nearly $200 / share. On revised figures out to 2027, they see a $300+ stock.
Edition: 197
- 18 October, 2024
Consumer Discretionary
Last week the gambling software company confirmed it was in discussions with Flutter over a possible £2bn Snaitech sale. PTEC was highlighted as a Buy during one of Revelare’s idea events in Nov last year and they think the report is still worth reading. The presenter provided details on the disagreement between PTEC and Caliente. He also discussed a number of levers that he believes could leave the stock being worth c.£43.00 vs. its current price of £6.50!
Edition: 193
- 23 August, 2024
Online Sports Betting / iGaming: Eyes on the prize
Consumer Discretionary
Arete sees the US OSB market growing revenues 6x by 2035E and looks likely to develop into a de facto duopoly. They assume FanDuel (Flutter) and DraftKings will take 70% combined share of handle and 75% share of revenues, with higher structural hold than rivals. Similar story in iGaming; the two companies are using product innovation to take share from legacy casinos and look on track for ~50% combined share, with upside from M&A. Arete has street high price targets for both names. DKNG offers the most upside (~100%) with Arete’s revenues delta vs. consensus improving from +8% in '24E to >30% by '26E, resulting in EBITDA estimates 42% and 51% above consensus, respectively.
Edition: 182
- 22 March, 2024
Screening UK Stocks: Combining quality, momentum and expectations indicators
Methodology - the initial universe are stocks with $2bn+ M/Cap. After that Willis Welby starts with a quality cut off based on their measure of Intrinsic Return on Capital Employed. They then narrow down using a combination of share price momentum and EBIT revisions before incorporating their expectations analysis via their measure of the implied to Y3 EBITM ratio. This has been another month of low turnover for the UK screen and it is notable that stocks coming in are exclusively in Consumer Services with the return of three retailers (B&M, Pets at Home, WH Smith) and Flutter. The four stocks leaving are Burberry, IAG, Hikma and Serco.
Edition: 166
- 04 August, 2023
Screening UK & Europe: Combining quality, momentum and expectations indicators
Methodology - the initial universes are stocks with $2bn+ M/Cap in the UK and $5.5bn+ across Europe. After that Willis Welby starts with a quality cut off based on their measure of Intrinsic Return on Capital Employed. They then narrow down using a combination of share price momentum and EBIT revisions before incorporating their expectations analysis via their measure of the implied to Y3 EBITM ratio. This month sees 6 stocks enter the UK screen (including Rio Tinto, Flutter, Renishaw) and 17 names added to the European version (including Nestle, Hapag-Lloyd, Roche, Vestas, Aker).
Edition: 140
- 22 July, 2022
Flutter Entertainment (FLTR LN) UK
Consumer Discretionary
Now trades at a meaningful discount to peers despite dominant position in ALL its major markets - this has been caused by negative, but “fundamentally meaningless” headlines over the last few months. Another issue is that US investors are still not familiar with the company despite FLTR’s US revenues being 50% higher than the No.2 player (its US segment’s implied valuation is just 3.5x FY23 EV / Sales vs. 8x for DraftKings). A spin-out of FanDuel (possibly in 1H22) should provide a catalyst to crystallise the company’s SOTP value; or given the ongoing consolidation in the online gambling space, could Disney be lining up a takeover? TP £200 (80% upside).
Edition: 124
- 26 November, 2021