ASX earnings season is a great opportunity to assess some of the ASX shares on our watchlists and evaluate whether or not their latest numbers merit an investment. This earnings season, one defensive ASX stock caught my eye with what I regarded as a first-class result for the 2024 financial year.
Last month, I signalled my admiration for Lottery Corp Ltd (ASX: TLC)'s earnings report. But today, I'd like to reaffirm that admiration.
Lottery Corp is an ASX 200 stock spun out of Tabcorp Holdings Ltd (ASX: TAH) in May 2022. It has exclusive licenses to sell lottery and Keno services in most Australian states and territories, many of which extend for decades.
Gaming services like the lottery and Keno are inherently defensive products and make for defensive ASX stocks. Customers tend to try their luck with them in both good economic times and bad, in times of high inflation and low inflation. In fact, there is an argument to be made that their appeal is heightened in times of economic stress.
We saw this play out in Lottery Corp's 2024 financial year. Just this week, we discussed the difficult economic conditions that many ASX shares had to wade through in FY2024, particularly how ASX retail shares were especially hard hit.
Yet none of that is apparent in Lottery Corp's earnings report.
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An ASX defensive share with 13.8% revenue growth
As we went through back on 21 August, the company revealed revenues of $3.997 billion. That was up 13.8% over the $3.51 billion reported last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items came in at $827.1 million, a 16% rise. This enabled Lottery Corp to report a net profit after tax (NPAT) before significant items of $411.8 million, up 21.3%. The company's NPAT after significant items was even better at $414 million. That was up a whopping 56.3% year-on-year.
All of this allowed Lottery Corp to announce a 14.3% hike to its final dividend to 16 cents per share (fully franked). The company will also pay out a special dividend worth 1.5 cents per share. This has all the markings of a very defensive ASX stock in my eyes.
As a bonus, Lottery Corp revealed that no fewer than a staggering one in two Australian adults participated in the $200 million Powerball jackpot that was held in May.
Despite Lottery Corp's impeccable credentials as a defensive ASX stock, the company's share price has been rather volatile over the past 12 months, trading in a range between $4.35 and $5.26. Even after these impressive earnings, we haven't seen a huge boost to the Lottery Corp share price. Check it out for yourself below:
As such, I'm planning to make a $5,000 investment in this company's stock in the near future. Hopefully comfortably below $5 a share.
