Over the past year, there’s been a divergence in performance for some of the most promising stocks in the market and ones that investors have clearly shunned. However, with some large-cap companies down over 50% in value during this period, they warrant further research to see whether they could be good undervalued stocks to buy. Here’s one I’m investigating.
A logical share price fall
I’m talking about Playtech (LSE:PTEC). It’s the stock that’s fallen the most over the past year that remains in the FTSE 250. The share price is down a staggering 63% in this period, but not all is as it appears.
Playtech’s a tech company serving the global gambling and gaming industry. It makes money from software licensing and platform fees, as well as earning fees from the gaming revenue generated from the operators’ platforms.
The bulk of the share price drop came in mid-2025, when Playtech paid a £1.5bn special dividend to shareholders. This came after selling the Snaitech brand to a competitor, which equated to roughly two-thirds of the company’s market value. On the ex-dividend date, the share price dropped by the dividend amount, so the stock mechanically slid by around 60% that day alone.
This means that even though the stock’s fallen, anyone who invested in the company over the past year would have banked the dividend. So in theory, they wouldn’t be financially down overall. But it raises the question of whether the stock’s undervalued now that it’s predominantly focusing on its B2B operations.
The outlook for 2026
The interim results from September showed that revenue across the US and Canada increased 64% versus the same time last year. This is clearly a growth market for the company, and an area where online gambling markets are expanding rapidly with more friendly state approvals.
After the divestment of Snaitech, the company has a much stronger balance sheet. With debt reduced and cash in the business, it means the company has the fuel to invest in new projects.
On the other hand, there are risks. From the Autumn Budget, online gaming taxes are rising from 21% to 40%. This will directly impact Playtech negatively.
Furthermore, some people won’t consider investing in the stock for ethical reasons. I’m in this boat, and don’t like having gambling businesses in my portfolio.
Given the reason for the share price drop, I don’t think Playtech’s undervalued. With a price-to-earnings ratio of 16.26, I think it’s fairly valued for a FTSE 250 growth stock. Even though there are promising signs of expansion outside of the UK, I think it’s too early to tell if there’s enough value in the B2B division to materially grow the business in the coming years.
As a result, I think there are better value picks in the index for investors to consider.
