This FTSE 100 stock was the big winner from the UK Budget

Entain was the big winner from the government’s latest announcement. But should investors consider buying shares in the FTSE 100 betting firm?

| 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.

Red briefcase with the words Budget HM Treasury embossed in gold

Image source: Getty Images

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.

Following the UK Budget announcement on Wednesday (30 October), one FTSE 100 company soared above the others. The stock in question was Entain (LSE:ENT).

Created with Highcharts 11.4.3Entain Plc PriceZoom1M3M6MYTD1Y5Y10YALL31 Oct 201931 Oct 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Its shares were 27% down since the start of the year. But the chancellor’s announcement about tax increases caused the stock to jump almost 9%.

Should you invest £1,000 in Primary Health Properties right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Primary Health Properties made the list?

See the 6 stocks

Bated breath

Rachel Reeves approached the first Budget of the new government aiming to find £40bn in taxes. With a promise not to target working people, businesses were squarely in the spotlight.

Before the announcement, various think tanks recommended higher taxes on gambling. The Social Market Foundation suggested raising taxes on online casinos from 21% to 42%.

Entain is one of the world’s largest betting companies and would have been right in the firing line. But that announcement never came – taxes on gambling are set to stay where they were.

As that became apparent, the share price jumped from £7.25 to £7.70 per share. And the stock eventually finished the day 9% higher than it started.

What it means for Entain

Entain’s website tells investors what a significant boost the latest news is. It states that tax is the company’s largest single expense and that it paid £529m in UK taxes in 2023.

For context, that’s around twice what the firm generated in free cash flows last year and almost five times what it distributed in dividends. The potential increase would have been substantial.

While another £529m wouldn’t have made much difference to the £40bn the chancellor was looking to find, it must have been considered. So Entain shareholders might well be pleased.

It’s therefore easy to see why investors have been responding positively to the latest news. But with the stock still well below where it was in January, is the news a buying opportunity?

Should I consider buying?

Entain has an attractive position in the online gaming industry. And the enduring popularity of this market was reflected in the company’s Q3 trading update earlier this month.

Despite this, it’s not a stock I’m interested in. While the company might have avoided a tax increase from the UK, there are plenty more external issues to pay attention to. 

It’s anticipating a changing regulatory environment in Brazil from 2025, which could prove a challenge. And the same goes for new deposit rules in the Netherlands. 

I think this kind of thing is going to be a constant challenge for the business and there’s not much it can do about it. That’s why it’s not on my list of stocks to buy. 

Rolling the dice

Avoiding a tax increase that was reported to have broad public support is a big win for Entain. And it’s no surprise to see the share price climbing as a result. 

The stock still looks cheap, at around five times EBITDA. But in this case, the nature of the business means I’d be happier investing elsewhere.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK 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

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »