FTSE 100 gaming giant gains big in 12 months
Formerly known as GVC Holdings, Entain underwent a rebrand in December 2020. The name may have changed, but its growth trajectory has not. Entain is one of the premier sports-betting and gaming firms in the world. It operates in over 20 countries and has operations online and in retail. Some of the brands under its umbrella include Coral, Ladbrokes, and bwin.
UK shares that have seen a substantial share price increase in recent times are always on my radar. Entain is one such FTSE 100 stock. As I write, shares are trading for 1914p. This time last year, shares were trading for 905p, which means a 111% increase in 12 months. In 2021 alone, Entain’s share price is up nearly 35%.
Why I like Entain
1. Acquisitions. Entain has a history of acquiring other firms in its market in order to grow and enhance its offerings. When I am looking for UK shares to invest in for my portfolio, acquisitions stand out. It shows me a business is thriving and has ambitious growth plans.
2. Performance. Entain has a good track record of performance. I am well aware that historic performance is not a guarantee of the future. That said, between 2017 and 2019, Entain’s revenue and profit grew. 2020 levels were not quite the same but this was to be expected with the pandemic affecting sporting events, and in turn consumers unable to place bets on them. In its most recent half-year results announced last month, the FTSE 100 incumbent reported a 28% increase in net gaming revenue (NGR). This was driven by strong underlying performance in all key markets. This was supplemented by a full sporting calendar and less restrictions affecting the retail business. Entain decided to upgrade full-year results due to positive performance in the year so far.
3. Growth prospects. I believe Entain could continue its growth journey. I cannot predict the future, but if its history of acquisitions and organic growth is anything to go by, I believe it could be an excellent UK share to add to my portfolio. One key growth area is that of the US market. From 2018, the US government gave its states permission to legalise sports betting and 20 states have done just that. Entain recently reported key growth in the US in its H1 update.
UK shares have risks
I have two issues with Entain. Firstly, gambling rules and regulations can change at any time. Due to Entain’s vast worldwide operations it could be protected if a rule change came into effect in one of its territories. Despite that, any wholesale changes could affect financials and investor returns. Next, Entain is in a very competitive market with many other firms vying for market share. This will always be a threat to its investment viability in my opinion.
Would I be willing to buy shares in Entain right now for my portfolio? Yes. I believe the rewards outweigh the risk for me and I would happily invest. Like all the UK shares in my portfolio, I will keep a keen eye on developments, especially in a highly regulated market like betting and gaming.
Jabran Khan 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.