After a 10% price jump, is this a top FTSE 100 share to buy now? – Motley Fool UK

I’m always on the lookout for my next share to buy. But I’d taken my eye off this one after a very volatile share price performance.
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Shares in Flutter Entertainment (LSE: FLTR) jumped 12% in morning trading Friday, on the release of first-half results. Is it too late to get in, or is it still a good share to buy now?
The Flutter share price had been sliding over the past year. But it looks like there’s been a change in investor sentiment since mid-July.
Looking back over the past few years, the Flutter share price has been through a bit of a boom and bust cycle. It’s all down to the pandemic, lockdowns, and social restrictions. And short-term booms like that can obscure the longer-term picture.
Looking at the latest figures, they still seem a bit mixed. Flutter saw an 11% rise in revenue compared to the first half of 2021. But adjusted EBITDA fell 19%.
Big one-off costs led to a reported loss after tax of £112m. But on an adjusted basis, Flutter recorded a £177m profit. That was still 42% down on last year, mind.
There’s some normalisation of longer-term gambling trends going on. But this mix of higher revenue with lower profits suggests we need more time to see where things are headed.
There is a change in geographic mix happening at the same time, which complicates things. In the US, Flutter saw positive adjusted EBITDA in the second quarter. It also says its sports betting market share grew to 51% in Q2, and that it has “confidence in full year 2023 EBITDA profit“.
Valuing growth shares in the early stages of a potential expansion is hard. And Flutter is no exception. Doubling up its adjusted first-half earnings suggests a price-to-earnings (P/E) ratio of 54. While not quite Tesla or Amazon territory, that’s still high.
But trying to value Flutter Entertainment on this year’s possible earnings would be a bit short-sighted. The company is still only in the early stages of its US expansion, and that market is potentially very large.
Forecasts show that big P/E coming down to under 19 by 2024. That is still more than two years away. And the past few years have shown what can happen to stock markets in that kind of timescale.
But if the analysts are even in the right general area, I’d see Flutter as a buy at the current price.
I’m not put off by an increase in net debt to £3bn. Usually that would turn me away, but I can see Flutter being able to deal with it in the medium term. As a reflection on cash flow potential, forecasts have a 3% dividend yield down for 2024 too. Chief executive Peter Jackson also spoke of potential in “high growth markets such as India, Canada and Brazil.”
The downside though, is the UK. The industry is still waiting on the Gambling Act Review White Paper, which is taking a long time. Flutter could face potential problems with future gambling legislation, both here and worldwide.
I also fear that soaring prices might put a squeeze on disposable incomes over the next year or so. And that has to be another risk. But Flutter is definitely a candidate share to buy for me.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon and Tesla. 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.
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