Aussie Titan in Electronic Gaming

Charging & Fearless is the only newsletter that delivers under-the-radar, global stock picks before they make front-page news. We traverse borders to uncover the explosive potential of international companies beyond the scope of Wall Street analysts. Enjoy the 5-minute pitch on this week’s stock below...

Aristocrat Leisure Limited

Aristocrat Leisure Limited is an Australian multinational company that designs, develops, manufactures, and distributes electronic gaming machines (EGM), social casino games, and casino management systems. The company is headquartered in North Ryde, Australia, and has operations in over 90 countries around the world. It is one of the world's leading EGM manufacturers, with its machines found in casinos and gaming venues all over the world. 

Primed to Grow

Aristocrat has been on a run recently, with shares up about 8 fold in the last 10 years. But the game is not up. Its strong financial position and track record of profitability also support its potential for continued growth. The company has a strong balance sheet with a net debt-to-equity ratio of 0.56 and a history of consistently generating positive cash flow from operations. In the fiscal year 2023, Aristocrat reported revenue of $6.3 billion and net income of $1.6 billion. 

While it’s hard to get an exact figure for exactly how much market share they own (circa 30% appears to be out there), we do know that they are a leader in a growing market. The industry is expected to continue its trajectory of growth, reaching an estimated $665.77 billion by 2030, with a CAGR of 13.1% between 2023 and 2030. This growth will be driven by continued advancements in technology, evolving consumer preferences, and the expansion of the gaming audience into new markets.

In Their Own Words

What Could Go Wrong?

The global gaming industry is highly competitive, and Aristocrat faces competition from other major EGM manufacturers, as well as from social casino and online RMG companies. The industry is also regulated in many jurisdictions, and Aristocrat must comply with a complex set of regulations, alongside the challenge of implementing responsible gaming programs. 

Final Word

Subscribe to Invest to read the rest.