Playtech- speculation or pure long-term investment?

Playtech was founded by Teddy Sagi and obtained $295 million from the Initial Public Offering in 2016.

Following the approval of the Safe Port Act in 2006, the American decree concerning the limitations for online gambling, Playtech shares lost 40% of its value in a single day.  Important to mention that the company does not accept US players.

Playtech currently has over 5,000 employees globally.

On the 22nd of October 2008, Playtech announced the purchase of a portion of Teddy Sagi's personal assets for $ 245 million. This second return of capital from Playtech brought Sagi's revenues to $ 540 million. Sagi also controls 41% of Playtech through the investment firm Brichington Trading Limited.

On 3 August 2018 Playtech completed the total acquisition of Snaitech, an Italian company active in the gaming and betting sector.

Let’s have a look at some fundamentals now..

P/E =6.4 vs 17 of the sector
P/B=1.2
Revenues and Net Income always on the rise (see table below).
Free Cash Flow on the rise and always positive
Debts which that can all be covered by current assets.
Dividend Yield =6.3%
Payout= 42%

If we also look at technical analysis, we notice that the stock price fell 50% from the June 2017 highs and is currently on an important support level represented by the highs, which acted as resistance back in 2008 and 2010 (see chart).

The stock is currently in a sellers’ market as it is under all the 20, 50 and 200 moving averages.

If we consider both technical and fundamental analysis, I think that the stock is currently undervalued.

If we buy the stock today, we will be buying at the same price as in 2008 when the company was making much less revenues and profits!

What do you think?

 

 

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Article written by  Davide Pagliaro

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