Quote:
Originally Posted by ihopeyouwin
https://ca.finance.yahoo.com/news/am...012400506.html
"In calendar years 2012 and 2013, Oldford Group recorded revenues of $976 million and $1.1 billion, respectively, and adjusted EBITDA of $342 million and $420 million, respectively. Its cash flow from operations in 2012 and 2013 was $267 million and $317 million, respectively. "
Can you elaborate on why you think it is overvalued? Amaya has market cap of 1.9B, acquires 420m in earnings for 4.9B. If yield for financing is below ~6.5% it creates additional cash flow. I am also somewhat bullish for further organic growth of the Pokerstars earnings.
Sure their bottom line number grew by 25%, but re
venues were up only 10% year over year. This sucks for the dominant industry leader, and the business is only contracting. If Stars was somehow to keep their revenues and margins at this level, it would take way over 11 years for this deal to pay for itself when you factor in interest costs.
The value of Stars brand in the American market, if they can get approved tomorrow is insignificant. Stars is a such dominant leader in the unregulated online market, because they offer great customer service, and players feel as confident as possible with their money deposited with Stars. So now they will enter a market which is regulated and transparent. What Stars did in the past, safety of funds and customer service, is now industry standard, therefore I do not think everybody will flock to pokerstars in the US like they did in the past. There are other options for a safe, consumer friendly environment, also their future competitors have extremely deep pockets, so no advantage there either.
Not too mention the state of the American market will be slow gradual change, if ever. Nevada, and New Jersey are huge disappointments and even if there is federal approval within 10 years, who is to say there will be players interested?
So mostly for those reasons I AYA is nuts for paying 11x earnings for a stock in an industry with so much uncertainty. Not to mention, look at the run up on the stock for the last 2 months, it more than doubled in value. Buy on rumor sell on news. I feel pretty confident this stock will be single digits by summer's end.