International sports betting and gambling company Entain (LSE: ENT) is lighting up the FTSE 100, rocketing 35% in the last month. That makes it the best performer on the blue-chip index in that time, leading the charge as UK equities recover from Donald Trump’s tariff turmoil. It topped the leaderboard yesterday (13 May) too, ending the day 6.02% higher.
For those of us who’ve been tracking it closely, it marks a dramatic recovery following a tough time. But the shares are still down 7.5% over one year and more than 50% over two.
I first woke up to the stock in April 2024, when it slumped 17% in a single month after the board warned that tighter gambling rules in the UK and the Netherlands would knock £40m off earnings. This came on top of a painful £585m fine linked to its former Turkish operations.
Entain was also nursing a hangover from a previous CEO’s aggressive buying spree, which left plenty of debt and not enough to show for it. I thought it would be a solid recovery play, and kept an eye on its fortunes.
A stronger second half
Things improved in August 2024, when the Entain share price leapt almost 10% on a positive trading update. First-half net gaming revenues (NGRs) rose 8% to £2.6bn, lifted by the right results in the Euros football tournament, while underlying cash profit rose to £524m. Management raised full-year guidance, and my interest grew.
Industry veteran Gavin Isaacs took over as CEO last September, bringing stability, and Entain’s 50:50 US venture BetMGM finally looked ready to deliver. In February, it announced that the joint venture is now the exclusive live odds betting partner for social media giant X (formerly Twitter).
Momentum is building
Fast-forward to 29 April, and Q1 results blew past expectations. Online gaming revenues grew 11% year on year, with BetMGM’s NGR surging 34% thanks to improved products and player engagement. Stella David was appointed permanent CEO, with Isaacs stepping away, job done.
It got another lift when broker Berenberg confirmed its Buy rating after noting that current earnings forecasts could prove too cautious if momentum holds. Then Trump relented and Entain became a surefire winning bet. They always are, afterwards.
Caution is creeping in
After a 35% jump in four weeks, the shares aren’t cheap. The price-to-earnings ratio is nudging 24 times, having doubled since last August, and the dividend yield is just 2.5%.
It’s not without risk. The recent spike might trigger some profit taking. Gaming is a risky and controversial business, prone to regulatory shocks. Right now, Australia’s financial intelligence agency (Austrac) has alleged that Entain accepted A$152m in bets from 17 high-risk customers who had “suspected criminal profiles and associations”, despite being aware they may have been laundering money.
Broker forecasts remain bullish. The median 12-month price target among analysts stands at 956p, some 27% higher than today’s levels. Combined with the yield, that could deliver a total return approaching 30%. Of the 20 analysts covering the stock, 13 rate it a Strong Buy. Seven say Hold. None say Sell.
So yes, Entain’s comeback looks very real. I could even claim I saw it coming. It’s still worth considering, but I won’t buy myself. I feel like I’ve missed my moment. Can’t win ’em all!
