Aristocrat (ASX:ALL) share price rises on half-year results

The Aristocrat Leisure Limited (ASX: ALL) share price is higher after the release of its half-year results. Here’s why.

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The Aristocrat Leisure Limited (ASX: ALL) share price is edging slightly higher this morning. After a couple of price wobbles soon after open, shares in the gambling giant are trading for $40.77 at the time of writing – up 0.3%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is currently 0.23% higher.

The company comes into focus after it released its financial results for the 6 months ending 31 March 2021.

Let’s see what the update contained and how it’s affecting the Aristocrat share price today.

Aristocrat share price lifts on half-year result

Before examining the results, it should be noted the company foreshadowed today’s bumper results in an earnings guidance released last week. That release saw the Aristocrat share price jump 9%.

For its half-year results, Aristocrat Leisure declared a net profit after tax (NPAT) of $362.2 million. This is up 18.4% on the prior corresponding period (pcp). Operating revenues fell 1% on the pcp to $2.23 billion and gross profit decreased 3.5% to $1.13 billion.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) are up 6% to $750 million. The EBITDA margin increased just over 2 percentage points to 33.7%. Earnings per share (EPS) increased 18.6% from the pcp to 56.8 cents. The company is paying an interim dividend of 15 cents per share after today’s results. 12 months ago, the company did not pay any dividend.

Normalised operating cash flow dropped 31.4% on the pcp to $358.2 million. The business attributed this to “strategic investments to support customer recovery”. As well, today’s results revealed net debt decreased by 41% to $1.33 billion.

Despite today’s good news, last week’s earnings update may have subdued significant movement today in the Aristocrat share price.

Aristocrat says the increase in profits was driven largely by a growth in the digital sphere – more than 50% of the group’s revenue came from this segment, which grew 28.8% on the pcp. It attributed declining revenue to the COVID-19 pandemic, which it says was only “fractional” given the virus’ disruptive impact on the hospitality sector especially.

Looking forward, Aristocrat expects “strong growth” going into the September reporting period.

Management commentary

Aristocrat managing director and CEO Trevor Croker said of today’s results:

The outstanding momentum we’ve delivered this half reflects our unwavering focus on the things we can control, which lies at the heart of our proven growth strategy.

Despite the uncertainties driven by COVID-19, we have maintained investment in the best people, talent, technology and product portfolios, and taken conscious decisions to accelerate implementation of our strategy.

He added that uncertain and volatile conditions were expected to continue near term, and “we are closely monitoring key factors including consumer sentiment and gaming venue patronage”.

Nevertheless, we enter the second half of fiscal 2021 with excellent momentum, resilience, and confidence with a strong balance sheet to continue to invest organically to grow share and accelerate growth through M&A in line with our rigorous criteria.

Aristocrat share price snapshot

Over the past 12 months, the Aristocrat share price has increased 61.3%. Only last week, it hit a record high of $41.44 a share.

Aristocrat Leisure has a market capitalisation of $26.2 billion.

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