The story of billionaire Len Ainsworth is surely the stuff of legends. After founding the hugely successful gaming machine company Aristocrat Leisure Limited (ASX: ALL), Len was diagnosed with cancer in 1994 and divided the company amongst his family.
The diagnosis turned out to be false and Len went on to chance his luck again, establishing Ainsworth Game Technology Limited (ASX: AGI) in 1995. And it is Ainsworth, with soaring growth and a high share price which won big over the long-term.
Ainsworth has a market cap of $1.2billion, almost half that of Aristocrat. But the company's aggressive growth has far exceeded its older sibling.
The last five years' revenues have grown at a compounded annual growth rate (CAGR) of 34%, while EBITDA have an incredible CAGR of 137%. Ainsworth's half-year result has continued this unbelievable run, with EBITDA jumping 66% to $49.7 million.
Sure, Aristocrat Leisure also has a history of strong profit growth. Earnings before interest and tax (EBIT) have grown by 71% since 2010, but Ainsworth is definitely my preferred company to buy after investors began selling the company in March which pushed shares down by 20%.
The shares have since recovered somewhat, but at $3.91 appear attractive for long-term growth with a price-to-earnings ratio of 19. Even if growth going forward slows from the 34% CAGR there are few other companies that are currently offering such growth rates at a comparable price with such minimal debt.
And continued strong growth is likely achievable given the big gaming growth to come. In Australia alone this includes expansions to SkyCity Entertainment Ltd's (ASX: SKC) Adelaide casino; a new Crown Resorts Ltd (ASX: CWN) casino in Sydney, up to three new casinos in Queensland as well as the massive new Aquis Resort casino proposed in place of Reef Casino Trust's (ASX: RCT) current licence; all this on top of Ainsworth's continued international growth.
Foolish takeaway
Len Ainsworth's story is all the more legendary for the spectacular growth of Ainsworth Game Technology. If the company can maintain this momentum and take advantage of the up-coming opportunities locally and abroad, at the current price I believe long-term investors could be well rewarded.
