This FTSE 250 stock released a trading update today. Should I buy shares now?

Jabran Khan details a trading update from this FTSE 250 gaming stock and examines whether he should add it to his portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

FTSE 250 incumbent Playtech (LSE:PTEC) released a trading update today for the first half of 2021. Should I buy shares for my portfolio?

FTSE 250 gaming giant

Through organic growth and strategic acquisitions, Playtech has grown to be one of the largest online gaming software suppliers in the world. It has lucrative and high-profile license agreements with names such as Warner Bros, Ladbrokes, and William Hill to mention a few. In addition to its B2B arm, it also possesses a substantial footprint in the B2C retail arena as well.

At the time of writing, shares in Playtech are trading for 378p per share. This time last year shares were trading for 27% less at 296p per share. In 2021 to date, Playtech’s share price is actually down approximately 5%. I am not concerned by this and this has mainly been caused by results announced for the pandemic period and anticipation of normality resuming.

Trading update and performance

The update released to the market today confirmed trading was inline with expectations. Playtech pointed to better than anticipated results in B2B which offset some shortcomings in its B2C. Due to the pandemic, different parts of the world have been under different restrictions so its B2C retail outlets may have opened at different times. Online performance was strong. 

Full-year results earlier in the year were affected by Covid-19. This was largely due to the cancellation of sporting events. The positive news from the FY results was that its digital segment grew approximately 30%.

Risk and reward

Like all FTSE 250 stocks, Playtech has risks, including two primary risks that concern me the most. Firstly, it operates in a very highly regulated industry. If these regulations were to change and hinder Playtech, it could affect operations and more importantly its financials.

The second risk with Playtech is that the pandemic is not over. As a global organisation there are different implications for it in different parts of the world. If restrictions come back into force both parts of its B2B and B2C arm can be affected. In addition, sporting events are still at the mercy of the pandemic. These events boost Playtech when they are happening.

Overall I do like Playtech and I would consider it for my portfolio. This trading update has confirmed that it is able to turn around the fortunes of its B2B blip it experienced as reported in full-year results. More importantly, it has a great position in a multi-billion dollar industry. As not only a provider of software but an operator of its own brands, it can position itself to thrive and has been doing so in the past.

Analysts believe that Playtechs annual earnings for 2021 will improve by close to 70%. In addition to that, in October of last year, insiders were buying shares. This is always a good sign for me. If those working for Playtech are happy to invest their cash then I feel confident too.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could Premier African Minerals be a millionaire-maker penny stock?

Shares of Premier African Minerals (LSE:PREM) have crashed over the past year. Is this a golden opportunity for me to…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Which FTSE defence stock should I buy? Here’s what the charts say

FTSE shares like BAE Systems have been flying higher over the last couple of years as the geopolitical situation has…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

Here’s why investors should consider buying Scottish Mortgage shares today

After a steady rise in recent times, this Fool thinks Scottish Mortgage shares could be worth considering. Here he explains…

Read more »

Young black man looking at phone while on the London Overground
Growth Shares

This FTSE 250 stock keeps blowing broker forecasts out of the water

Jon Smith considers the ever-increasing share price targets for a FTSE 250 stock that has risen by 120% in the…

Read more »

A mixed ethnicity couple shopping for food in a supermarket
Investing Articles

Marks and Spencer shares could rise 29%, according to this broker

Marks and Spencer shares currently sport a P/E ratio of just 10, and one well-known City broker believes the company…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 of the best FTSE 100 beginner stocks to consider buying

The Footsie offers people just beginning their investment journey some of the best stocks to buy. Here are two to…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Here’s why the Aviva share price suddenly dived

The Aviva share price suddenly dropped by over 6% the other day. But there's a simple explanation for this sudden…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

With no savings, I’d listen to Warren Buffett to aim for long-term wealth

Warren Buffett looks for "1-foot bars" to step over, not "7-foot bars" to jump. Stephen Wright looks at what this…

Read more »