On November 30, gaming company in Aristocrat Leisure Limited (ASX: ALL) will release its full year results for the period ending September 30 2017.
The company delivered an excellent operational result for the half year ending 31 March 2017 with revenue rising 21.6% (24% in constant currency) to $1.23 billion.
Net profit after tax and before amortisation of acquired intangibles (NPATA) soared by 49% (53% in constant currency) to $272.9 million whilst earnings per share before amortisation of acquired intangibles (EPSA) rose 48.8% to 42.7 cents a share.
The solid growth over the prior corresponding period was driven by strong performances across the company's global portfolio with the North America, Digital and International Class III segments the standout performers.
Plarium
Aristocrat announced in August that it was acquiring Israeli social gaming company Plarium for US$500 million plus an earn out for the 2017 and 2018 calendar years.
Plarium is the game developer behind popular multi-player online game Vikings: War of Clans and increases Aristocrat's exposure to the fast-growing digital market amid rising smartphone adoption rates and improved monetisation strategies.
The acquisition of Plarium was completed in October after the necessary regulatory approvals were granted. Thus, Plarium's impact on the company's overall bottom line won't be evident until next year. Management does expect the Plarium purchase to be EPSA accretive in year one of operations.
Guidance
The company has guided for FY17 NPATA to rise between 20%-30% over the prior corresponding period, which puts NPATA in the range between $477 million and $517 million.
The guidance implies a lower second half which management attributes to a planned increased in design and development investment in conjunction with a concentration of new openings in the first half that are unlikely to repeat in the second half. Morningstar's analysts' estimates have forecast for full year earnings to be at 81.1 cents a share.
The company continues to deliver in the vital North America market capturing market share and posting an impressive 34.5% growth in segment profit to US$267 million for the March half year on the back of strong growth across Class III premium gaming operations.
Aristocrat remains one of the best large-cap businesses on the ASX with a global reach and given its growth potential commands an above average market multiple.
Whether the stock manages to retest its 52-week highs at the $24 level or retreat will depend on the outlook especially after rival Ainsworth Game Technology Limited (ASX: AGI) was sold off following a weak trading update for the first half of FY18 yesterday.
