Jumbo Interactive share price on watch after signing Tabcorp deal

The Jumbo Interactive share price is one to watch after inking a 10-year deal with a fellow Aussie wagering group, Tabcorp Holdings Limited.

| More on:
lotto balls bursting out of laptop computer screen representing jumbo interactive share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Jumbo Interactive Ltd (ASX: JIN) share price is one to watch after the company signed a long-term deal with Tabcorp Holdings Limited (ASX: TAH).

What does Jumbo Interactive do?

Jumbo Interactive is an Australian-based entertainment company and a digital retailer of official government and charitable lotteries.

The group's flagship service, OzLotteries, is one of Australia's largest digital retailers with over $150 million in ticket sales per year and over 2 million customer accounts.

Based on the current $13.62 Jumbo Interactive share price, the entertainment group is valued at $850.6 million.

Why is the Jumbo Interactive share price on watch?

Jumbo has finalised and signed a 10-year deal with Tabcorp to extend its current 15-year arrangement. The deal, announced on 29 June, locks in the current partnership across most of Australia until 2030.

That's good news for investors and we could see the Jumbo Interactive share price on the move in early trade.

This helps build the platform for Jumbo's plan to expand its lottery sales across Australia as part of its '$1 billion vision' by 2022.

However, the new deal does not permit the sale of Tabcorp lottery products to Western Australian customers (where Tabcorp does not have a license).

Jumbo expects to know by 30 September the prospects of an agreement with Lotterywest regarding a potential solution for Western Australia.

The company's shares have fallen 9.0% lower this year despite a strong recovery since the March bear market.

The Tabcorp share price is also under pressure after falling 21.2% lower this year.

What does this mean for Jumbo Interactive?

This is good news for Jumbo Interactive in providing some more long-term certainty.

I'd expect the Jumbo Interactive share price to be on the move as investors take in the latest announcement.  This should also underpin sales growth and help build momentum behind the 'Powered by Jumbo' software platform.

Despite challenges amid the coronavirus pandemic, Jumbo reaffirmed its FY20 guidance on 29 June 2020. That included higher revenue expectations despite soft net profit and earnings numbers.

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. 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 Scott Phillips.

More on Share Market News

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

This ASX 200 stock's 'compelling valuation' makes it a strong buy

Goldman Sachs thinks a 50% return could be on the cards for investors.

Read more »

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Monday

Will Aussie investors have a good start to the week? Let's find out.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A miner stands in front oh an excavator at a mine site
Opinions

3 reasons ASX uranium stocks can keep charging higher into 2025

I think the recent sell-down in ASX uranium stocks has been overdone. Here’s why.

Read more »

A businessman sits on a chair looking at a pile of chairs stacked up to the ceiling of a white empty room.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

Consumer discretionary shares led the ASX 200 market sectors last week with a 0.36% gain.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Opinions

3 reasons to be positive on ASX 200 shares in FY25 (and 3 to be wary)

Vinay Ranjan from Airlie Funds Management says we should ignore market noise and buy quality stocks.

Read more »

A woman uses her phone to pay at the counter, with a queue of more customers behind.
Share Market News

Where Aussies are spending their money, and the ASX shares that could benefit

Households are still opening their wallets on certain categories.

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Share Market News

With nothing in my savings account, I'd use Warren Buffett's golden rule to build wealth

Here's how you could grow your wealth by following the Oracle of Omaha's golden rule.

Read more »