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Could earnings at these FTSE 350 value stocks be about to explode?

Boosted by game-changing M&A activity over the past year, I reckon GVC Holdings (LSE: GVC) could be on course to deliver stunning earnings expansion.

The breakneck momentum GVC enjoyed in 2016 has carried into this year, the firm advising last month that group net gaming revenues (or NGRs) on a pro-forma basis were up 15% during January 1 to March 23, with rises of 18% and 6% enjoyed across its Sports and Games divisions respectively.

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This is up from the 9% improvement in group NGRs the Foxy Bingo and partypoker owner posted during 2016.

On the move

While GVC faces the same regulatory uncertainty as the rest of the gambling sector, I believe the firm’s broad geographic footprint should insulate it from the worst of these pressures and keep providing meaty top-line growth.

GVC operates across 18 countries, and the huge acquisition of bwin.party in February 2016 has significantly bolstered the group’s position in its core European marketplace. Sports NGRs from its new division shot 26% higher last year, and the scale benefits and cost synergies from the tie-up promise to make GVC a major player on the global stage.

Indeed, the smooth integration of the new unit prompted GVC to note last month that “we feel the organic growth opportunity of the enlarged GVC is greater than originally expected and a key strategic theme in 2017 will be increased, but focused, investment in marketing to fully exploit this potential.”

The City certainly believes GVC is back on the road to growth after some recent bottom-line trouble, and expect the company to bounce from losses of 51 euro cents per share in 2016 to earnings of 58.1 cents in the present period.

And earnings are expected to boom to 71.8 cents in 2018, up 24% year-on-year.

GVC has seen its share price stomp higher in recent months, the bingo behemoth having gained 17% in value since the start of 2017. And with the business sporting a very-attractive forward P/E ratio of 15.3 times, I reckon there is plenty of scope for the bull run to keep going.

To the rescue

The huge strides forward AA (LSE: AA) has made in enhancing its digital proposition (epitomised by the resounding success of its mobile app) as well as improving its marketing strategy convinces me the earnings woes of recent years may finally be at an end.

The roadside assistance specialist saw revenues from its rescue service rise 2.5% last year as its personal membership base rose by 4,000 members, to 3.35m. Sure, these numbers may not be headline grabbing at first, but they break the long-running erosion in AA’s customer base and pay testament to the company’s transformation measures.

With its rebound strategy still rolling and new product releases slates for the coming months, City analysts expect earnings growth at AA to click into gear from this year, and robust 12% advances are anticipated in the years to January 2018 and 2019.

And these figures make the company a great value stock too, with AA sporting P/E ratios of 10.9 times and 9.7 times as well as PEG ratios below the bargain watermark of 1 through to the close of 1. I reckon AA offers plenty of upside at current share prices.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

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