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.
Image source: Getty Images
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.
| Owain Bennallack
Inflation was moribund in the West for two decades, with near-zero interest rates since the financial crisis their barely perkier…
Read more »
| Paul Summers
Lots of popular FTSE 100 (INDEXFTSE: UKX) shares look temptingly cheap today. But Paul Summers thinks quality matters most.
Read more »
| Harshil Patel
Dividend shares can be an excellent way to earn passive income. Our writer considers a plan to put extra cash…
Read more »
| Ben McPoland
UK inflation is predicted to soar as high as 22% by December. Should I worry this will trigger a stock…
Read more »
| Royston Wild
This expert suggests that investing in dividend stocks is a good idea. Here are two dividend-paying shares our writer’s considering…
Read more »
| Ian Benfield
I have invested in a stock market portfolio of FTSE 350 shares that I expect to continue outperforming these indices…
Read more »
| Christopher Ruane
Can our writer apply investment lessons from Warren Buffett to improve his own financial position? This is how he’d try.
Read more »
| Royston Wild
The London stock market is packed with top stocks to give my passive income a big boost. Here are two…
Read more »
View All
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.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.


Leave a Comment