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FY20 result: Should investors bet on Aristocrat Leisure (ASX:ALL) shares?

Aristocrat Leisure Limited (ASX: ALL) just reported its FY20 result to investors. Would it make a good bet?

Aristocrat has a number of different products including electronic gaming machines, casino management systems and digital games. Its products are available in more than 80 countries.

FY20 result

Aristocrat reports two sets of numbers. The normalised results are statutory profit (before and after tax) excluding the impact of some significant items.

Aristocrat reported that its revenue dropped 5.9% to $4.14 billion. This was due to a 32% decrease in Aristocrat’s land-based revenue because of the impact of COVID-19 customer venue closures and social distancing restrictions. This was offset by 29% growth in Aristocrat’s digital revenue.

Normalised EBITDA (EBITDA explained) fell by 31.8% to $1.09 billion, with the EBITDA margin decreased by 10% from 36.3% to 26.3%.

Normalised net profit after tax (NPAT) dropped by 52.5% to $357.1 million and earnings per share (EPS) also fell by 52.5% to 56 cents.

In terms of the reported results, including recognition of a $1.1 billion deferred tax asset, profit after tax went up 97.2% to $1.38 billion.

Operating cash flow fell 5.8% to $1.02 billion, which helped the net debt position improve by 29.5% to $1.57 billion.

Dividend

Aristocrat’s board decided that the full year dividend would be 10 cents per share, a decrease of 82.1% from 56 cents per share.

Management comments

Aristocrat CEO and Managing Director Trevor Croker said: “Aristocrat continued to take share and maintained its leadership of key gaming markets and segments over the full year, with an increased focus on customer service and engagement. Continued investment in new hardware and games delivered superior operational performance and supported resilient demand. 

Aristocrat Digital delivered exceptional operational performance, while continuing to diversify and strengthen its portfolio and pipeline of new games. Aggressive and dynamic investment in user acquisition supported momentum and allowed the business to fully leverage COVID-19 related tailwinds, while taking further significant strikes forward in organisational scale, capability and effectiveness.”

Outlook

Aristocrat Leisure is expecting to maintain or grow its market share with its gaming operations. It’s also expecting sustainable growth in floor share across key gaming outright sales markets globally.

Management are also expecting to grow its digital bookings, whilst investing for more growth.

The Aristocrat share price is almost back to its all-time high, so it’s not as cheap as it was. I think there are other ASX growth shares that would be better opportunities for the recovery like EML Payments Ltd (ASX: EML), Tyro Payments Ltd (ASX: TYR) or even A2 Milk Company Ltd (ASX: A2M).

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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