The online gaming giant announced a big share repurchase program and gave long-term growth guidance to 2027.
Online gambling giant Flutter Entertainment (FLUT 5.21%) rallied 6.5% on Wednesday as of 1:24 p.m. ET.
You may know Flutter as the parent company of FanDuel, which is a popular U.S. fantasy sports site. However, the company also has physical sportsbook properties across the U.S., Ireland and the U.K., Australia, and other geographies, as well as platforms for online betting and casino games, known as “iGaming.”
Today, Flutter made news at its investor event, during which it gave guidance to 2027 while also unveiling its first-ever buyback program.
Flutter is flying on 2027 guidance
At its investor event, Flutter disclosed its medium-term guidance for 2027. Management now forecasts the total addressable market for iGaming and online daily fantasy sports to grow at an 8% annualized rate through 2027, reaching $368 billion in total.
But management also sees Flutter outgrowing its end markets, with a $21 billion revenue target in 2027. That would mark an impressive peer-beating 14% average annualized growth rate over the $14.2 billion in revenue management guided for this year on its second-quarter call back in August.
And it gets better, as Flutter also forecasts a seven-point EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expansion to 25% as it scales further, with management projecting annualized free-cash-flow growth of 36% over the next three years, reaching $2.5 billion in 2027.
In addition, Flutter announced a $5 billion share repurchase program, which it intends to execute beginning later this year and running over the next three years. That $5 billion would amount to about 12% of the company’s shares at the current market cap.
Investors liked what they heard
Judging by today’s reaction, investors appear to like what they heard. Shares now trade for roughly 17.2 times that 2027 free-cash-flow target, which is not terribly expensive in today’s environment for a diversified leader in a growth market. Flutter looks like an intriguing consumer discretionary stock today, especially as interest rates come down.
Billy Duberstein and/or his clients have no positions in any of the stocks mentioned. The Motley Fool recommends Flutter Entertainment Plc. The Motley Fool has a disclosure policy.