Aristocrat Leisure Limited (ASX: ALL) has reported its half year result to 31 March 2019, is the share price a buy?
Founded in the 1950’s, Aristocrat Leisure is a business which creates gambling machines and other technology for customers around the world.
What Aristocrat Reported
The gaming business revealed that its statutory revenue increased by 35% to $2.1 billion. ‘Normalised’ EBITDA (click here to learn what EBITDA means) grew by 19.2% to $766.3 million. However, the normalised
‘Normalised’ net profit after tax (NPAT) grew by 14.8% to $356.5 million whilst reported profit after tax went up 34.9% to $346 million.
‘Normalised’ operating cash flow also increased by 45.2% to $438.6 million. Net debt improved by 5% to $2.43 billion and the ratio for net debt / EBITDA improved by 0.4x to 1.6x.
The company said that it is expanding its North American addressable market with the successful move into a number of adjacent markets while growing in its established market segments.
Aristocrat also said that it’s taking steps to be entitled to additional non-Australian tax deductions in the US while continuing to be a tax resident and to pay taxes in Australia. However, this is likely to lead to reductions in cash tax paid and the accounting tax expense, but will not impact how much Australian tax is paid.
Aristocrat Dividend
The Aristocrat Board decided to increase the interim dividend by 15.8% to 22 cents per share, which is a solid increase.
Aristocrat Management Comments
Aristocrat CEO and Managing Director Trevor Croker said: “Aristocrat continues to deliver above market profitable growth, leading to a strong free cash flow and the ability to reinvest to self-fund future growth, whilst ensuring strong foundations remain in place.”
Is Aristocrat A Buy?
Although I’m not a huge fan of gambling businesses for ESG reasons, they do make a lot of money and Aristocrat is one of the fastest growing ASX50 businesses.
With a fairly reasonable price/earnings ratio for its growth rate, I think it could be a better investment than the big banks for its overseas earnings.
However, I think I would rather own the small growth shares in the free report below compared to Aristocrat.
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