Tabcorp Holdings Ltd (ASX: TAH) shares have taken a significant hit in the past 12 months. During that time, shares in the wagering and gaming company have plunged over 49%.
They are down another 4% today to 55.3 cents per share, bringing the losses to more than 20% over the past month of trade.
Today's price range also marks a new 52-week low for the company.
So, what should investors do as the company's stock struggles? Let's see what the experts think.
Tabcorp shares at 52-week lows
Tabcorp shares remain heavily sold in August, continuing a downtrend that's been in situ for over 12 months.
As my colleague Bernd reported, the stock was one of the worst ASX performers in both May and July.
The latest drop comes after the company announced the appointment of ex-Australian Football League (AFL) boss Gillon McLachlan as its new CEO.
This was after former CEO Adam Rytenskild suddenly resigned following a controversy over inappropriate language at work.
During McLachlan's decade at the AFL, revenues doubled to more than $1 billion in 2023. This tenure as AFL boss was deemed positive, with the potential to replicate this success at Tabcorp.
But the market didn't respond well, dropping its shares into the red, according to my colleague James.
Impact of regulatory changes
But the issue is more than just a CEO change. Tabcorp is also navigating a challenging regulatory environment in the wagering and gaming industry.
The proposed crackdown on gambling advertising by the Labor government could significantly impact the industry at large.
Restrictions such as a ban on gambling ads an hour before and after live sport and a limit of two ads per hour until 10 pm could halve the number of new bookmaker customers. That's the opinion of industry analyst Andrew Orbach, according to The Australian Financial Review.
On balance, the decision is tipped to slash revenues earned from the advertising of gaming and wagering during sports. Major industry stakeholders – including those from the company – met with the communications minister last week, although were made to sign non-disclosure agreements.
While Tabcorp has publicly supported some advertising restrictions, this stance is not entirely selfless.
Overall, the impact of these changes on the industry remains to be seen. Still, investors are concerned.
What should investors do?
Given the significant decline in Tabcorp shares over the past year and the mixed market response to recent developments, investors face a tough decision.
Those holding Tabcorp shares might be doing so in anticipation of a potential turnaround under new leadership. Others have no doubt cut their losses amidst the ongoing regulatory challenges.
But strangely enough, the consensus of analyst estimates rates the stock a buy, according to CommSec.
This is made up from six buys, no holds, and two sell recommendations. On weighted basis, the opinions appear biased to the upside.
Whilst this is in no way a guide for investors to go by, it does suggest there is some bullish sentiment.
Still, I'd remind investors that even with this sharp sell-off, the stock is valued at a price-to-earnings ratio (P/E) of nearly 24 times.
Comparatively, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) is trading on a P/E of 18 times at publication. Is it wise to pay a premium for a stock at its yearly lows?
I'm not sure Warren Buffett would agree on that one.
Time will tell if the stock can 'dig itself' out of a hole from here.
Foolish takeaway
Tabcorp shares have experienced a challenging year, marked by significant declines and ongoing regulatory pressures.
And the selling pressure is large. The stock has lost more than half its value in the past year.
As always, conduct your own due diligence and speak to a professional advisor when needed before making any investment decisions.
