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Value Chaser's avatar

“Even if regulated revenue grows at a mid- to high-teens pace, continued erosion in unregulated markets would weigh on total growth and shareholder returns.”

I find this comment very interesting and could go both ways. While I agree slower growth in total could harm shareholder returns. I question if Evolution would trade back to a 20+ P/E multiple IF their regulated revenues become a majority of their revenue / profits. I tend to believe the high risk unregulated market revenue is what scares investors and is suppressing their multiple. If investors see consistency and decrease of risk from unregulated markets Evolution may become an investable asset for more institutions.

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Erwin's avatar

Echo the above. It is important to distinguish the certainty aspect of regulated markets commanding a higher multiple but the lower growth and margins as detrimental to multiples. I think the latter will have a stronger impact - increasing share of revenues from mature markets with increasing gambling protections limiting market growth rates

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