The Flutter Entertainment (LSE: FLTR) share price has been one of the FTSE 100 index’s worst performers lately. And it’s also been a poor performer in 2021 as a whole. But, as a bargain-hunting investor, FLTR is now on my radar as a potential growth buy. Here’s why.
The Flutter share price slides
As I write on Wednesday afternoon, the share price hovers around 12,825p. In other words, it costs over £128 to buy a single share of this business. Whoa. But at its 52-week high, the stock hit 19,680.8p on 19 March this year. So this share has crashed by 34.9% in less than eight months.
What’s more, the share price has markedly weakened lately. Over five days, FLTR is down 9.8% and it has dived by 11.7% over the past month. This places it at #98 of 101 Footsie stocks over 30 days (one FTSE 100 company is dual-listed). Over six months, the shares are down 10.6%, while they have lost 6.6% of their value over one year. In addition, FLTR has been one of the FTSE 100’s worst performers in 2021, dipping by 15.1%.
In short, FLTR shares have been a bit of a short-term lemon since late 2020. But these falls have dragged it onto my ‘bargain bin’ value-finding radar. What’s more, I note that the share price has risen by 45.8% over five years, easily beating the FTSE 100’s 8.3% gain (both exclude dividends).
Is FLTR in value territory?
As a value investor, I usually seek out stocks with low price-to-earnings (P/E) ratios, high earnings yields (EY) and market-beating dividend yields. Alas, due to the Covid-19 pandemic, Flutter’s last dividend payment was in May 2020, after which the company suspended its dividend. Also, Flutter’s earnings turned negative during the pandemic, so I don’t have any trailing P/E and EY to guide me right now.
That said, when I look under Flutter’s bonnet, I see a big business with powerful brands. The company operates nine global brands across over 100 international markets. These big betting and gambling brands include PaddyPower, Betfair, FanDuel, FoxBet, Sky Betting and Gaming, and PokerStars. Flutter has more than 14,000 employees and 14m customers. Also, at the current Flutter share price, the business has a market value of £22.5bn, so it’s a FTSE 100 heavyweight.
Latest results
In its latest trading update released Tuesday, Flutter lowered its earnings guidance to £1.24bn-£1.28bn from £1.27bn-£1.37bn, which has clearly spooked investors. The gambling group took a £60m hit from punter-friendly sports results in October. Also, it temporarily withdrew from the Netherlands market, costing it £10m this year and it should cost it £40m in 2022. As a result, the Flutter share price took a hit on Tuesday. But business is going great in the US, where states are opening up to legal gambling. Indeed, it has a 42% share of US online sports betting, plus 18% of the online gaming market.
I don’t own Flutter shares at present, but I’d buy them today. What attracts me is the company’s growing customer base and revenues, especially in the high-growth US market. Also, FanDuel could grow to be a huge part of this business in future. Then again, US growth takes huge marketing spend so there are risks to its expansion there. Even so, I’d happily take a punt on Flutter at the current share price!
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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
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