The Aristocrat Leisure Limited (ASX: ALL) share price has outperformed the struggling S&P/ASX 200 Index (ASX: XJO) to round out September 7.12% higher (at the time of writing). With an anticipated restart of poker machine venues in Australia and strong digital growth, could the Aristocrat share price be an ASX 200 growth share to add to your growth portfolio?
FY20 performance
Aristocrat's strong digital performance in FY20 more than offset the COVID-19 related impacts across its land-based business. The company's revenue increased 7% to $2.3 billion while net profit after tax fell 14.2% to $305.9 million.
Aristocrat's land-based electronic gaming machines performed in line with expectations through to mid-March, when all markets were adversely impacted by COVID-19 related customer venue shutdowns. The North American segment saw an increase in installed machines whilst maintaining an underlying fee per day charged against casinos. A phased approach to restarting its land-based operations is expected to occur on a location-by-location basis. The gradual reopening of these venues should see a progressive improvement in Aristocrat's land-based earnings.
The company's digital segment revenues and bookings increased 19% driven by the introduction of new games. Meanwhile, the established franchises continued to perform well through the introduction of new content and features. The continued growth in its digital games could position the Aristocrat share price as a strong ASX 200 growth share moving forward amidst COVID-19.
Resurgence in pokies
An article published by ABC last week highlights that Victorian gamblers have saved more than $1.3 billion in poker machine losses since the lockdown measures took place. However, there are concerns that people will binge on pokies when venues reopen. New South Wales reported an 8% increase in losses when venues reopened, while Queensland reported a 32% increase.
Continued growth in iGaming and apps
Aristocrat's digital portfolio has been a key driver of its growth. The company noted a discernible uplift in the portfolio's performance connected with COVID-19 stay-at-home orders, with April bookings increasing 20% against March.
JPMorgan also remains confident that Aristocrat will enter the iGaming market in the United States. iGaming is defined as slot and table games using real-money stakes that are played online. The iGaming model is currently legal in six US states and could represent US$900 million in gross gaming revenue in just New Jersey alone. JPMorgan recently upgraded the Aristocrat share price to overweight and increased its price target to $38.60 from $28.50.
Foolish takeaway
Aristocrat could see a recovery in its land-based business combined with the continued outperformance of its digital business. I believe the key catalyst for Aristocrat's next leg up is its potential entry into the iGaming market in the US. This is a significant growth opportunity that could position the Aristocrat share price as a leading ASX 200 growth share. I believe investors should watch Aristocrat closely for any intentions to step into this space.
