Lockdown punters flock to 888

Stuck at home having a flutter? You weren’t alone last year. 

Gambling company 888 Holdings (888) saw its revenue climb over 50 per cent last year and its adjusted pre-tax profit more than doubled to $116m (£83m). 

Gamblers’ increased efforts last year - futile as they may be - will go straight to shareholders. The board has decided to pay an extra 1.6¢ on top of the policy-determined final dividend of 10.4¢ per share, because of the “record-breaking performance” in 2020. This takes the total 2020 dividend to 18¢, which is triple the 2019 pay-out. 

Chief executive Itai Pazner said 2020 was a “landmark year” where 888 attracted plenty of new gamblers. “We welcomed a record number of new members to our brands, nearly one and a half million, with our differentiated products and our big data supporting highly effective marketing,” he said. 

Consensus forecasts compiled by FactSet see adjusted earnings per share falling slightly this year, to 24¢, after doubling between 2019 and 2020 to 27¢. 

This dividend yield boost – from 1.6 per cent at the time of its interim results to 3.7 per cent now – makes clear to investors what’s on offer, and the net cash position means balance sheet risk is low. Hold. 

Last IC View: Hold, 256p, 30 Sep 2020