The shares of Aristocrat Leisure Limited (ASX: ALL) have been an early mover after the gaming manufacturer and developer announced impressive full year results.
In early trade its shares rocketed almost 6% higher to $15.74. Since then they have given back some of these gains and sit higher by around 3%.
A few key highlights from Aristocrat's results include:
- Revenue of $2,128.8 million (+34.5% YoY)
- EBITDA of $806 million (+54.1% YoY)
- Statutory net profit after tax of $350.5 million (+88% YoY)
- Earnings per share of 62.4 cents (+68.2% YoY)
- Final dividend of 15 cents per share (+6 cents)
Although all of its segments performed incredibly well, playing a key role in the strong result was the performance of its North American and Digital operations.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) in North America grew 28.3% to US$434 million thanks partly to significant market share growth from its US premium gaming operations segment.
Even more impressive was the performance of its Digital segment. It saw a 127.1% increase in EBITDA to $114 million. This was driven by the continued success of its Heart of Vegas game following its Android launch.
Across its entire digital portfolio daily active users increased 16.4% to 1,268,733. Pleasingly the average revenue generated per user, per day, also increased by 10.5% to 42 U.S. cents.
Not only is the company attracting a growing number of daily users, but it is also generating more revenue from each of them. Management expects this industry-high revenue rate to be maintained in FY 2017.
For the rest of the business it remains bullish and expects continued growth next year. Which it certainly will have to produce to justify its shares trading at just under 25x full year earnings.
I'm a big fan of the company, but I'm not sure I would buy at this price as I believe growth is likely to slow to more normal levels next year.
Instead I would suggest investors wait until its half year results to see if it has continued to deliver a sufficient level of earnings growth to warrant the premium its shares trade at today.
In the meantime I would look at growth shares on reasonable valuations such as Bellamy's Australia Ltd (ASX: BAL) and Blackmores Limited (ASX: BKL). Both can be picked up for around 19x estimated full year earnings.
