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Could investors hit the jackpot with Jumbo Interactive Ltd?

The share price of leading online lotteries retailer Jumbo Interactive Ltd (ASX: JIN) remains close to its 52-week low after the release of the group’s full year results.

Here are the highlights from the announcement:

  • Total Transaction Value (TTV) jumped 21% to $130 million
  • Revenue gained 18% to $29.2 million
  • Net profit after tax sunk 80% to $660,000
  • Fully franked full year dividends remained steady at 3 cents per share
  • Net cash of $16.7 million
  • Customer account database increased 11% to 1.92 million

The growth in TTV and revenue was thanks to strong growth in the Australia lottery operations which enjoyed solid growth in customer numbers.

Bottom line profits however were pulled down by the group’s international expansion effort into Germany which is currently a drain on earnings. For the year, the German business recorded revenue of $172,000 and a net loss before tax of $3.6 million.

Outlook

In the near term, shareholders can look forward to a final dividend of 1.5 cps which has been declared by the board. Jumbo’s stock will trade ex-dividend on September 2, with payment scheduled for September 25.

In the medium term, investors will remain alert to the relationship between Jumbo and Tatts Group Limited (ASX: TTS). So far the relationship remains intact with Jumbo a major retailer of Tatts’ lotteries, however there is an ongoing risk that this arrangement could change.

In the longer term, Jumbo’s current share price weakness –  the stock has fallen 34% over the past 12 months – could turn out to be a buying opportunity if the group successfully executes its plans in Germany.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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