When you think about stocks that are up 200% in 2024, investors thoughts will quickly go to technology stocks and names like NVIDIA Corp. (NASDAQ: NVDA) and Palantir Technologies Inc. (NYSE: PLTR). But after a strong earnings report, there’s another name that may be joining that list, Flutter Entertainment plc (NYSE: FLUT).
Flutter is the parent company of the popular sports betting site, FanDuel. The company delivered a solid, but mixed, earnings report on November 12 that has pushed the stock to an all-time high of $269.29. Third quarter earnings of $3.25 billion was up 27% year-over-year and beat analysts’ estimates of $3.10 billion. Adjusted earnings per share of 43 cents were 11 cents below the consensus estimate of 52 cents.
In another key metric, average monthly players (AMP) rose 16% to 12.9 million, and the growth in AMP was even stronger in the United States, coming in at 28%.
Overall, Flutter raised its full-year guidance. However, it did narrow its guidance forecasts in the United States. The company also announced it was on track to launch the first tranche of the $350 million share buyback program it approved earlier this year. The program is expected to run through the first quarter of 2025.
The Flutter Entertainment analyst forecasts on MarketBeat show eight analysts have already raised their price target, with Craig Hallum giving the stock the largest boost from $275 to $350.
The Most Wonderful Time of the Sports Betting Year
Flutter Entertainment is headquartered in Ireland, where football has a different meaning. Certainly, the beginning of the European soccer league season is a key reason why international revenue was up 15%.
But it can certainly appreciate the appeal of American football to its top and bottom lines. The company raised its full-year guidance based on strong demand for betting on National Football League (NFL) games.
To help quantify that demand, the company said that peak wagers per minute for NFL games were already higher than Super Bowl LVI, which is perhaps the most active sports betting, even from a volume standpoint in any calendar year.
Sports Betting is Growing Around the World
Sports betting has been showing steady growth since the United States Supreme Court allowed states to legalize sports betting in 2016. Since then, 38 states have legalized sports betting. However, investors should expect more growth in the U.S. market.
Missouri approved sports betting in November 2024, which will open up markets like Kansas City and St. Louis beginning in the second half of 2025. With Florida, Texas, and California still available as potential markets, there’s a potential for a much larger addressable market in the United States in future years.
Flutter isn’t limiting its expansion plans to the United States. Sports betting is expected to become legal in Brazil on January 1, 2025, and the company also expects to launch in Alberta, Canada, in the first quarter.
But what about competition? Although this is a highly regulated industry, there are plenty of competitors vying for consumer dollars. However, Flutter has been steadily adding market share and it’s fair to say that FanDuel along with DraftKings Inc. (NASDAQ:DKNG) are two of the largest players in the sports betting and online casino industry, holding a combined 67% market share.
However, even if other competitors gain traction, sports betting is not a zero-sum game. Many bettors are encouraged to use more than one online sportsbook for sports betting.
The Case for FLUT Stock as a Blue-Chip Stock
Many investors will avoid stocks like FLUT because of their link to gambling. However, “sin stocks” those that are tied to human vices have a defensive quality that can make them attractive to traders and investors.
That's because many defensive stocks are well-established and financially sound blue-chip companies. Flutter Entertainment hasn’t reached blue-chip status yet. For one thing, the company is still expanding its market and will have to continue spending on that growth. That also means it’s not likely to be paying a dividend anytime soon. With both of those elements and others, the missing element appears to be time.
However, the company is already a well-established market leader that has a large addressable market that spans the globe. In the near term, FLUT stock is showing signs of being overbought. But investors should use any pullback in FLUT stock as a buying signal.
