If you've seen my previous posts, I've been tracking the jackpot environment for Brightstar Lottery which the company points to when reporting good/bad EPS for each quarter.
Q2 was ok for the jackpot environment and Q3 has been good so far, and still on track to be a great quarter 1/3 of the way in.
Mega Millions reached $800m and was won last week.
Powerball is currently $748m for tonight's draw.
Italy's super Enalotto has reached €204m (top 3 highest jackpot in history for the area and about to take over 2nd place)
The higher the jackpot, the more sales, the more profit.
Yes Q2 may not be great, but I believe it will show a more efficient outfit, a large share buyback and a commitment to the rather large 9% dividend at these reduced share prices. If Powerball continues to roll like it did last year then that will be a big help in paying down the debt from the recent license payment.
Why is this value now?
Net debt is not reaching its highest point in the company's history after the Italy license payment.
Revenue was decent in Q1 despite an unbelievably bad run for the jackpot environment.
The company has major plans for expanding it's online presence and also the new areas coming live with new revenue.
Lottery's are changing in favour of building mega jackpot styles, leading to more surges in sales behaviour.
I've bought a boat load of this stock, it's my single highest stock purchase and I fully intend to hold this until the Q3 results which I'm certain will be good. Q2 results may be the lowest this share goes, I've bought more because I just can't see it dropping further. Average analyst reckons a 40% upside here.
My current position is down 8% so I'm relatively near the bottom when you factor in the dividends received.