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Is the William Hill share price a millionaire maker?

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The William Hill (LSE: WMH) share price has risen by over 350% from the 29p low seen in March. Brave punters who piled in during March’s stock market crash have won big on this bookmaker.

Despite this sharp rise, William Hill still looks cheap against historic levels. At a last-seen level of 134p, the shares are worth 50% less than they were two years ago.

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Is there still money to be made from this famous name? I think it’s possible.

The good news

After a £2 stake limit on in-store gaming machines was introduced last year, William Hill closed 713 of its UK shops. That turned out to be a lucky move ahead of the coronavirus lockdown.

The group’s continuing online expansion is also helping to cushion its performance. According to a recent update, UK online revenue online fell by 10% during the first six months of this year.

I’d guess this performance would have been much stronger except for the cancellation of most sporting events. Fortunately, the acquisition of the Mr Green online casino last year provided an alternative outlet for punters keen to lay bets.

There’s more good news overseas. International online revenue rose by 17% during the 23 weeks to 9 June, while US revenue was up by 30% before the coronavirus lockdown hit performance.

William Hill appears to be doing all the right things.

The not-so-good news

The firm is keen to boast of its 24% share of the growing US sports betting market. But this remains small. William Hill’s US revenue totalled just £126m last year, generating an operating profit of just £1m.

It could take some time for this to replace the lost profits from the UK high street business, where operating profit fell by 45% last year, from £150m to just £83m. The most profitable and stable part of the business is online, but even here, profits fell by 9% to £119m last year.

New chief executive Ulrik Bengtsson has some work to do to return all parts of the group to growth. In the meantime, he’s been forced to suspend the dividend and raise £200m in a share placing to help cut the group’s debt.

William Hill share price: What I’d do now

In my opinion, anyone buying William Hill shares today is betting that online and US growth will outpace any further decline in the UK high street business. As you can probably guess, I’m not keen to own shares in a high street bookmaker. I see these stores as low-quality businesses that are likely to attract continued attention from regulators.

Broker forecasts suggest William Hill will report a £31m loss this year, followed by an adjusted net profit of about £87m in 2021. This prices the stock on around 14 times earnings. I can see some opportunity for investors from here. But the group faces tough competition online and in the US.

I don’t think William Hill’s share price is obviously cheap. For investors hoping to make a million from stocks, I’d look elsewhere.

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Roland Head 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.

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