Why is the Aristocrat Leisure (ALL) share price rising?

Posted: 17 May 2021 12:43 pm
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Shares in the gaming giant have bounced back strongly from the COVID-19 setback and are up over 50% in the last 12 months.

Gaming and slots machine business Aristocrat Leisure (ASX:ALL) is among the top-performing stocks on the ASX boards on Monday. At the time of writing, Aristocrat shares were up nearly 5% at $39.10. The gains build on a steady climb over the last several quarters, and the shares have now risen more than 50% in the past 12 months.

Why the Aristocrat stock price is climbing

Aristocrat on Monday posted a trading update that upgraded earnings performance for the fiscal first half. The company now expects normalised net profit to rise 12% from a year ago to $412 million. Earnings before interest, tax and other items (EBITDA) are likely to be 6% higher at $750 million.

The results represent a turnaround from the strife the company has faced in 2020. A year ago, the gaming giant was forced to cut staff and impose pay cuts on employees and management and scrapped its dividend payment in order to cope with the fallout from the COVID-19 lockdowns.

But the situation is very different now.

"We have continued to take share and maintained our leadership of key gaming markets and segments, while also growing our share in Digital games, where we are now a top 5 game publisher in tier 1 Western markets," Chief Executive Trevor Croker said in a statement on Monday.

Cautious amid recovery

Aristocrat’s Gaming business saw exceptional product performance and customer engagement and was also boosted by stronger than expected economic conditions in its key US and ANZ region markets.

Its digital business is also delivering above industry-average growth in bookings, which is resulting in revenue and profit growth at par with levels a year ago. The business is benefiting from a diverse portfolio of world-class titles as well as strong investment in User Acquisition (UA), Live Ops, new game content and features.

Overall demand continues to be elevated, compared to pre-COVID levels, Aristocrat said.

But the company is still being cautious with the CEO saying the outlook remains uncertain due to COVID-related volatility.

“We are closely monitoring key factors including consumer sentiment, gaming venue patronage and currency headwinds,” Crocker said.

“We will continue to rigorously execute our strategy over the second half of fiscal 2021, with increased investment in D&D, UA to support new game launches and existing games and strategic capabilities that will sustain our longer term growth.”

Aristocrat Leisure will report its half-year results on May 24.

Considering buying Aristocrat Leisure shares?

If you are keen to buy shares in Aristocrat Leisure, consider investing through an online share trading platform.

Do keep in mind that not all platforms offer the same set of stocks. Some only offer US stocks, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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