Bad bet

Betting group GVC Holdings (LSE: GVC) enjoyed the briefest of stints on the FTSE 100, crashing out in early March. It was hit by the outbreak equine flu which led to cancelled race meetings, including Super Saturday at Newbury, that cost bookmakers up to £2m a day. Investors also took flight in March after the group’s chief executive and chairman dumped three-quarters of their shareholdings, worth £20m.

The long-feared (in the industry) Government cap on fixed-odd betting terminals from a maximum of £100 to £2 came into force on 1 April. At today’s price of 628p, GVC is down 45% from its year high. So why am I liking it?

Go West

The bad news is out there and now investors can focus on future prospects. These include gaining access to the US gambling market, now opening up after sports betting was legalised. GVC chief executive Kenneth Alexander reckons the US will be the world’s biggest regulated gambling market within five years and is targeting it via a 50:50 joint venture with MGM Resorts.

GVC, which owns the Ladbrokes Coral chain of bookmakers, is already the world’s largest gambling group. First-quarter underlying net gaming revenue rose 9%, driven by strong online revenues, although high street trading was flat. There was a surprise drop in winning margins, which means customers have been getting the better of the bookie, but that won’t last.

Buy the dip

The £3.66bn group now trades at just 9.5 times forecast earnings and offers a forecast yield of 5.6%, covered 1.7 times by earnings. Those are nice numbers. City analysts expect earnings to fall 22% in 2019, then rebound 18% next year. By then, the yield could be as high as 6.7%. Royston Wild thinks it’s a thrilling dip buy. Naturally, it’s a gamble. But what did you expect?

Now here’s an even cheaper FTSE 250 stock, with an even juicier yield. Builder Crest Nicholson (LSE: CRST) trades at just 7.7 times forecast earnings while offering an incredible forecast yield of 8.4%, with pretty decent cover of 1.5.

This combination is fairly common in the construction sector right now. For example, Taylor Wimpey trades at 8.5 times forward earnings and yields 9.6%. For Persimmon, the figures are 7.6 times and a whopping 10.3%.

Brexit blame game

Housebuilders are still making good money from the robust housing market, but sentiment has been knocked by Brexit. Also, everybody knows the market is propped up by the Government-backed Help to Buy scheme, recently extended to 2023 but for first-time buyers only. Be warned: some fear that after years of strong growth, global house prices could be set to crack.

Crest Nicholson is down 20% over the last year but its share price is in recovery mode. There may be no meaningful rally until our relationship with the EU is sorted, and that could take six months, possibly longer. Earnings are forecast to fall 12% this year. Still, there is that thumping yield while we wait for better times.

The post Are these 2 high dividend stocks the biggest bargains on today’s FTSE 250? appeared first on The Twelfth Magpie.

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

Today, I’ll give my view on this troubled fashion brand. I’ll also take a look at a FTSE 250 stock that’s expanding rapidly but struggling to win back investor loyalty.

Board quits as founder returns

On Tuesday, Julian Dunkerton won a shareholder vote by just 2.3%, reinstating him as a director of the company. As a result, the firm’s entire board resigned, along with both of its corporate brokers.

His co-director Peter Williams is likely to handle the business headaches this has caused while Dunkerton’s role will be to find a way of returning the business to growth.

What went wrong?

Ex-chief executive Euan Sutherland said that warm weather and too much reliance on winter clothing were to blame for the firm’s problems. Dunkerton said that long lead times, poor product choices and discounting were at fault.

From the outside, it’s hard to be sure who’s right. But Sutherland had very little fashion experience and Superdry’s performance has declined since Dunkerton left in March 2018. Giving him another chance makes sense to me.

Can Superdry be fixed?

Dunkerton’s co-founder James Holder is said to have new designs ready. These will be made in Turkey and should be in stores this summer — quicker than if they’d come from the firm’s usual factories in China.

From what I can see, the pair aim to strengthen the Superdry brand and move it away from being seen as just a retailer

One advantage they do have is that the company is debt free and has historically generated plenty of cash. This means changes can be made without having to keep lenders happy.

Another attraction is that although profits are expected to fall by 40% this year, the dividend is still covered twice by forecast earnings. The shares now trade on just 8.4 times forecast earnings with a 5.8% yield.

That seems a good starting point for a turnaround investment to me. I don’t know if Dunkerton will succeed. But as an 18% shareholder he has a strong incentive. I’d be happy to buy at this level.

A risky bet?

I’m less bullish about fast-growing gaming firm GVC Holdings (LSE: GVC), which owns the Ladbrokes Coral change of bookmakers, plus a range of online gambling businesses.

GVC shares have fallen 50% from last summer’s all-time high of 1,184p as analysts have slashed their profit forecasts in the face of tougher high street regulation. Investor confidence also took a knock recently when chairman Lee Feldman and CEO Kenneth Alexander sold shares worth £20m.

Trading during the first quarter of the year has been positive, with online gaming revenues up by 17%. But UK high street trading was described as flat. And new rules cutting the maximum stake on in-shop gaming machines from £100 to £2 came into force on 1 April.

It’s too soon to know how this change will affect profits from Ladbroke Coral’s 3,400 shops. But with net debt running at 2.5 times EBITDA and an uncertain outlook, I see GVC as a poor choice for investors.

The 6% dividend yield may seem tempting, but I believe there are better buys elsewhere in this sector.

The post Got £2k for an ISA? One 5%+ dividend stock I’d buy today appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings and Superdry. 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.

Investors piled out in the early days of March after news emerged that chief executive Kenneth Alexander and chairman Lee Feldman’s decided to sell £13.7m and £6m worth of shares, respectively.

Alexander’s proclamation that both men “remain convinced of the exciting prospects for the business” and “will not reduce our holdings below the current levels” was treated with a pinch of salt. And the commitment of the directors came under additional scrutiny when Sky News subsequently reported that Feldman was on the verge of stepping down from the board. At the time of the share sale just days before, it was claimed that both he and Alexander were “fully committed to GVC.”

Time to buy?

While this tale could very likely have more room to run in the months ahead, a scenario that could create even more turbulence for the FTSE 250 firm’s share price, I reckon GVC remains a brilliant long-term buy.

I reckon the heavy stock price reversals of the first quarter presents a great buying opportunity, particularly as the gambling giant now deals on a bargain-basement forward P/E ratio of 9 times and carries a gigantic corresponding dividend yield of 6.4%.

I’m not going to pretend that the Footsie firm doesn’t have other problems. Indeed, its market value has been sinking since last summer amid fears over the implementation of capped stakes for fixed-odds betting terminals (FOBTs) in the UK and, more recently, a decision by the US Department of Justice (DoJ) to  overturn an earlier Supreme Court ruling, meaning that all forms of internet gambling which cross state lines are prohibited.

It’s a gaming goliath

I would still argue, though, that GVC’s long-term earnings outlook remains extremely bright. The company greeted the DoJ’s January ruling with little more than a shrug and has since claimed its joint venture in the States with MGM still offers a “very significant opportunity” for growth in this bright growth market.

Besides, there’s no guarantee that the Justice Department’s ruling won’t itself be revoked as the number of lawsuits demanding that the decision be changed grows.

The impact of FOBT stake limits on April 1 may be more of a concern to GVC, but I remain convinced that the long-term profits outlook for the business remains quite brilliant.

The acquisition of Ladbrokes Coral in 2018, on top of additional M&A activity in Australia and Georgia, now makes the business the world’s biggest operator in the rapidly-growing online gambling sector, and this paves the way for significant profits growth in the years ahead.

Indeed, the surging popularity of its sports and games platforms propelled pro-forma net gaming revenues (NGRs) 9% higher in 2018, and progress here continues to pick up the pace. In the period spanning January 1 to February 21, NGRs jumped 11%, driven by a 22% improvement in comparable online revenues.

The confusion concerning the boardroom is certainly a bother, but not something that detracts from GVC’s great investment case, in my opinion. Indeed, I consider it to be a top dip buy right now.

The post This FTSE 250 dividend stock has sunk 20% in Q1! I think it’s a thrilling dip buy appeared first on The Twelfth Magpie.

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

Having been under sustained pressure over 2018 on the back of regulatory changes, is there anything in today’s announcement to suggest that the shares are a decent contrarian buy? Yes and no.

A “challenging year”

Despite a “challenging year” for all bookmakers, CEO Peter Jackson said that the £4.9bn cap had “regained its mojo“.

Revenue rose 9% at constant currency to £1.87bn in 2018 with the company seeing 5% growth online and an increase in market share in the UK.

That said, reported pre-tax profit came in at £219m — down 11% on that achieved in 2017. Earnings per share were also 6% lower due to investment across the pond. 

On the topic of growth opportunities in the US, Mr Jackson remarked that the decision to overturn the federal ban on sports betting last May had “the potential to be the most significant development to occur within the sector since the advent of online betting” and justified the company’s speedy swoop for the FanDuel brand.  

As far as 2019 was concerned, the Dublin-based business stated that trading had started in line with expectations and that it was seeing “good momentum” across its divisions, despite the inevitability of further regulatory pressure.

In perhaps the most bizarre part of today’s report, PPB also informed the market of its desire to change its name to Flutter Entertainment to reflect the “increased diversity” of its brands and operations. What an awful name!

Contrarian buy?

After losing over 30% of its value since shares peaked last May, one might suspect the shares would now be changing hands at a very reasonable price.

Not exactly. Trading on a little over 18 times expected earnings, the stock still looks pretty expensive compared to rivals and the market as a whole.

Having maintained its 200p full-year dividend, a trailing yield of 3.3% certainly isn’t awful, but there are companies in the FTSE 100 with far more tempting payouts. 

With further investment likely and net debt rising fast, I can’t see this situation changing anytime soon. 

Better price?

Of course, Paddy Power isn’t the only company wanting a piece of the action in the US. 

Shares in fellow FTSE 100 constituent GVC (LSE: GVC) rose strongly yesterday after the company released some very decent full-year numbers. Pro forma net gaming revenue came in 9% ahead of last year (at £3.57bn) with pro forma underlying EBITDA also rising 13% (to £755.3m).

Hailing a “transformational year” following its acquisition of Ladbrokes Coral, CEO Kenneth Alexander stated that effective marketing and a bumper World Cup had meant GVC had performed “ahead of expectations and materially ahead of the market”. Now the world’s biggest sports-betting and gaming operator, he believes the company is well-placed to deal with the forthcoming regulatory hurdle and tax increases in 2019. 

Recent momentum certainly shows no sign of slowing with the firm reporting an 11% rise in net gaming revenue since the start of the year to 24 February compared to over the same period in 2018. 

Taking into account its lower valuation (12 times earnings), higher dividend yield (4.6%) and US joint-venture with MGM Resorts, I’d probably bet on GVC over Paddy Power Betfair.

That said, neither compares to my personal favourite in the sector.

The post Is this out-of-favour FTSE 100 growth stock now a great contrarian buy? appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings and Paddy Power Betfair. 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.

As things stand, two FTSE 250 companies are set for promotion to the FTSE 100, with two current blue-chips heading for relegation to the second-tier index. Who are the winners and who are the losers? And should investors be looking to back the rising stars or their out-of-favour counterparts?

Income buy

Flying FTSE 250 insurer Phoenix Group looks nailed-on for automatic promotion to the top index. Its shares ended last week at 700p, giving it a market capitalisation of a bit above £5bn. According to my sums, this would rank it at 86 in the FTSE 100 — one place below wealth manager St. James’s Place and one place above engineering group Spirax-Sarco.

My Foolish colleague Roland Head has written about the attractions of Phoenix’s business. And with its prospective yield of 7% for 2019, I agree with Roland’s assessment that “the stock rates highly as a pure income buy.”

One I’d avoid

Barring a big drop in its share price before Tuesday’s market close, Phoenix’s automatic entry to the elite 100 is assured. But it’ll be a closer-run thing for engineering and industrial software specialist Aveva Group (LSE: AVV). My calculations say it currently sits bang on the automatic promotion threshold rank of 90.

Many of my fellow Fools have cautioned against this stock, due to its high earnings multiple and low dividend yield. Nevertheless, its share price has continued to rise defiantly, closing on Friday at 3,052p, giving it a market capitalisation of £4.9bn.

I view Aveva as an attractive and well-managed business. However, trading at over 36 times current-year earnings expectations, with a skinny prospective dividend yield of 1.5%, I’m inclined to agree with my colleagues that the sky-high valuation makes it a stock to avoid.

I would buy Wood

If Aveva does join Phoenix in the top index, the two companies in line to be culled are current bottom-ranked FTSE 100 stock John Wood Group (share price 533.4p; market cap £3.6bn) and second-bottom-ranked GVC Holdings (LSE: GVC) (share price 631.5p; market cap £3.7bn).

My fellow Fool Roland Head has written positively about oil services business Wood Group. Trading on a modest forward earnings multiple (10.4 at the current price), with a good prospective dividend yield (5.3%), I certainly see this stock as worthy of a ‘buy’ rating.

My pick of the field

However, my top ‘buy’ is multinational sports betting and gaming group GVC. It owns some of the industry’s leading brands, including sports betting-led brands Ladbrokes, bwin, Coral and Sportingbet, as well as games-led brands such as Gala, partypoker, PartyCasino and Foxy Bingo.

It has a further revenue stream from providing online gaming services on a business-to-business basis to a number of third-party operators, including MGM in the US, PMU in France and Danske Spil in Denmark.

This is a highly cash-generative business, with a strong record of delivering value for investors through organic growth and acquisitions. Trading on 10.6 times forecast 2019 earnings, with a prospective 5.4% dividend yield, the shares are a snip in my book.

The post Which stocks will be in and which will be out in the FTSE 100 spring reshuffle? appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

Based on today’s less than enthusiastic response to its latest trading update (-3%), it seems many market participants still need to be convinced that this fall is overdone. 

Losing streak

While short on detail, today’s release did state that adjusted operating profit for the 53 weeks to the start of January is expected to come in around £234m. This is 15% below that achieved in the previous year (although it was at least in the middle of the range previously predicted by the company of between £225m and £245m).

At least some of the blame was attributed to a reduction in year-on-year profits from Hill’s retail estate in the UK, itself suffering as a result of “wider high street conditions.”

With new limits on fixed-odds betting terminals being introduced later this year, and recent consolidation in an already extremely competitive industry, it’s hard to see things improving here any time soon. 

Instead (and like many of its peers), the £1.5bn-cap regards the potential relaxation of legislation surrounding sports betting in the US as its primary growth opportunity. On this front, the firm’s partnership with casino chain Eldorado Resorts is a positive step.

However, time will tell as to whether this market will prove as lucrative as management believes. The FTSE 250 constituent’s US operation “broadly broke even” last year after taking into account “significant expansion costs.“

Hill’s shares traded on 12 times earnings before markets opened this morning and yielded nearly 6%. In addition to this, and the aforementioned opportunities in the US, the planned imminent purchase of Swedish gaming company Mr Green and“good underlying performance” from its online offering last year, might be enough to convince some contrarians to take a position.

That said, I’d be inclined to wait to see what exactly CEO Philip Bowcock has planned for its UK estate (due to be “remodelled” in 2019) before deciding whether the company is finally worthy of investment. 

Better odds?

Of course, William Hill isn’t the only company that will benefit from a change on betting rules across the pond. £4bn-cap GVC Holdings (LSE: GVC) — owner of rival Ladbrokes Coral — could do very well from the development, given its US joint-venture with MGM Resorts.

In sharp contrast to the reaction to Hill’s news, last week’s trading update on the whole of 2018 was cheered by investors and it’s not hard to see why. Proforma underlying earnings are now likely to come in between £750m and $755m — ahead of what the market was expecting.

Despite like-for-like revenue falling 3% in the UK, GVC saw online revenue jump 19% over the year. Business was also good in Europe with revenue from retail growing 16%.  

Based on these numbers, CEO Kenneth Alexander reflected that GVC was “materially outperforming the market” and taking market share from rivals in all territories it operates in. 

Still 40% below the share price highs achieved last July, GVC trades on almost the exact same valuation as William Hill’s. A forecast yield of almost 4.8% is lower than that offered by the mid-cap, but this payout is better covered by anticipated profits. 

The post Why I still don’t think it’s time to bet on this battered FTSE 250 stock appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

Although there are continuing risks facing the budget airline, such as Brexit-related uncertainty and weak consumer confidence, it appears to offer recovery potential. As such, it could be worth buying alongside another possible turnaround stock which released an encouraging update on Thursday.

Improving prospects

The company in question is sports-betting and gaming specialist GVC (LSE: GVC). Its 2018 financial year was relatively positive, it said in a post-close update, with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) ahead of expectations at between £750m and £755m. Its online growth remains impressive, with online net gaming revenue rising by 19%. The performance of the business in Europe was strong, with net gaming revenue growth of 16%. This helped to offset a weak UK performance, where revenue declined by 3%.

The company continues to outperform the wider gaming market. It is also gaining market share across all of its major territories. Recent acquisitions, as well as its US joint venture, are expected to catalyse its financial performance, with its bottom line forecast to rise by 10% in the current year. Following GVC’s share price fall of 26% in the last year, the stock now has a price-to-earnings growth (PEG) ratio of around 1.4. This suggests that it offers a wide margin of safety and could deliver a successful recovery over the long run.

Turnaround potential

easyJet also offers the potential for a successful turnaround. As mentioned, the company has experienced a challenging period which has caused it to underperform the FTSE 100 by around 12% in the last year. Although further risks may be ahead from the potential challenges posed by Brexit, as well as weak consumer confidence in the UK, the outlook for the company continues to be relatively positive from an investment perspective.

One reason for this is the margin of safety that the stock now offers. It trades on a PEG ratio of 0.6 as a result not only of its falling share price, but also because it is forecast to post a rise in net profit of 18% in the current year. The company looks set to benefit from resilient demand among consumers, many of whom may be trading down to budget airline options as a result of uncertainty surrounding the prospects for the UK economy.

Alongside this, easyJet also offers improving income prospects. Rising earnings are set to lead to an increase in dividend payments, with the stock now having a forward dividend yield of over 6%. Since dividend payments are covered twice by profit, they seem to be affordable and could help to catalyse investor sentiment over the medium term.

The post Why I think FTSE 100-member easyJet’s share price crash could be a buying opportunity appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of easyJet. The Motley Fool UK has recommended GVC Holdings. 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.

Last time I covered the online gambling colossus in October I lauded its aggressive global expansion policy that has recently taken it into the US. And happily the business hasn’t wasted any time before embarking on further potentially-transformative actions, announcing last week the acquisition of Australia’s Neds International for a possible total cost of £52m.

Becoming one of the leading gambling operators down under is a core objective for the Footsie firm, and online sports betting hero Neds has illustrated the exceptional potential of the Australian territory. Despite only launching in 2017 it is anticipated to have generated gross gaming revenues of A$100m and wagers of A$1bn already.

Other news flow for GVC hasn’t been as promising in recent weeks, though, as the UK government has U-turned on an earlier U-turn concerning the maximum stakes for fixed-odds betting terminals. Laws to cut the maximum bet to £2 from £100 at present will indeed be introduced from next April, despite more recent plans by the Treasury to push them into October of next year.

Risk vs reward

And this means City analysts have cut their 2019 earnings estimates for GVC and they are now expecting a 5% earnings fall.

Despite this, I am confident that the long-term outlook for the business remains strong, thanks to its ever-improving geographical and operational placing in the rapidly-expanding digital betting arena.

Of course, concerns over changing regulatory landscapes are ever-present for the likes of GVC. But I believe that the company’s low, low forward P/E ratio of 10.4 times looks very appealing in respect of its overall risk and reward profile.

And when you throw chunky dividend yields of 4.1% and 4.4% for 2018 and 2019 respectively into the equation, I reckon it’s a splendid share to snap up today.

American hero

Another dividend share I’d happily pluck from the FTSE 100 today is Experian (LSE: EXPN).

The credit reporting agency’s brilliant prospects on foreign shores is something I’ve paid specific attention to before. So I was pleased to see evidence of further progress on this front in first-half financials released earlier this month.

Organic revenues at Experian rose 8% between April and September, driven by a 10% improvement in its core North American marketplace. Experian sources around 60% of group sales on the other side of the Atlantic, and there are plenty of reasons to expect revenues to keep on churning higher thanks to the strong economic environment and helped by a strong product pipeline. Its Ascend Sandbox is due for release for mid-market US customers in the second half, to cite one example.

This means that earnings growth is expected to rev up from here, the 1% profits rise predicted for the year to March 2019 anticipated to improve to 12% in the following year. And this means that dividends are predicted to keep tearing higher too, resulting in decent yields of 1.9% and 2.1% for this year and next respectively.

Experian might be pricey, but I reckon a prospective P/E ratio of 24.3 times is a very fair reflection of the firm’s rising might, not just in America, but across the globe.

The post 2 FTSE 100 dividend stocks I’d buy for 2019 and beyond appeared first on The Twelfth Magpie.

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• The ISA strategy that could quietly turn small sums into life-changing wealth

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian and GVC Holdings. 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.

Take GVC Holdings (LSE: GVC) for instance. Its share price has ducked by close to double-digit percentages since the start of October, meaning that the gambling giant’s price has corrected more than 25% since the record highs of £11.70 per share struck at the end of July.

This degree of bearishness is baffling. Indeed, around the time that the summer rot set in, it had announced an ambitious accord with MGM Resorts International to bolster its global footprint by entering the US, and potentially give revenues a massive dose of rocket fuel.

And since then, trading details have remained extremely encouraging, including third-quarter financials that were unpackaged last week.

Revenues momentum rapidly improving

In this release, GVC, whose brands include bwin, Ladbrokes and Coral, declared that thanks to market share gains in all of its major regions, turnover continued to power higher during the July to September quarter. Total net gaming revenues (or NGRs) across the group clocked in at 14%, rising from 8% in the first six months of 2018.

And once again the huge potential of the rapidly-expanding online gaming segment was laid bare, the company declaring that NGRs generated via cyberspace detonated 28% during the three months to July.

One other thing: speaking of that aforementioned drive into North America, GVC said it believes its “sports-betting joint venture with MGM is best placed to be the market leader in the US and we have taken the first steps on that journey with the soft-launch of our sports-betting app in New Jersey.”

Wonderful value, delicious dividends

City analysts believe that the Footsie firm has all the tools to keep its strong run of earnings rises in action, and they are forecasting a 60% earnings rise for 2018. A more subdued 5% rise is predicted for 2019 although, given the rate at which GVC’s top line is gaining momentum, I reckon that this forecast has more than a fighting chance of being upgraded in the months ahead.

Regardless, these perky profits estimates lead to expectations of more generous dividend expansion. GVC lifted the full-year payout 13% last year to 34 euro cents per share, and another heady hike, to 38 cents, is anticipated for this year. Consequently the yield sits at 3.9%, a figure that improves to 4.3% next year on account of an estimated 42 cent reward.

As I suggested in the headline, the gaming star can be considered a bona fide bargain at current prices. Those earnings projections create a forward P/E ratio of just 10.9 times, comfortably below the widely-accepted value watermark of 15 times or less, in addition to a corresponding sub-1 PEG reading of 0.2.

I think GVC is a share that all savvy dip buyers should be giving close attention to today. I feel it has the capacity to make its shareholders richer over the next decade and beyond.

The post Have £3,000 to invest? Here’s a FTSE 100 dividend stock I consider a bargain after recent selling activity appeared first on The Twelfth Magpie.

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• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

I don’t have to tell you how fast the online gambling segment is growing. This has helped earnings at this particular FTSE 100 business surge by double- and even triple-digit percentages in recent years, and City brokers are expecting another impressive improvement in 2018. A 60% rise is forecast, to be specific.

A quick look at GVC’s latest trading statement earlier in September explains why the number crunchers are so optimistic.

Internet sensation

In the six months to June, the FoxyBingo and partypoker owner saw net gaming revenues (NGRs) on a pro-forma basis rise 8%, to £1.7bn, while underlying EBITDA on the same basis leapt 11% to £349.5m.

It’s easy to see why the board was enthusiastic enough to lift the interim dividend 10% year-on-year to 16 euro cents per share. With GVC’s Online division winning market share in all of its major territories (pro-forma) NGRs here jumped 18% in the first half, with NGRs at its Sports and Games internet brands jumping 19% and 13% respectively in the period.

The buzz created by the World Cup during the summer has helped to drive activity at the gambling Goliath in recent months, while the introduction of new products has also piqued punter interest. What’s more, the acquisition of Ladbrokes Coral in March has also boosted GVC’s position in the online segment, with NGRs at its former rival’s brands rising 14% from January to June.

Stateside statement

The next exciting stage in the Footsie firm’s growth story comes from its decision to enter the US marketplace through a tie-up with MGM Resorts International, following key regulatory changes to the betting market by the Supreme Court.

Indeed, the British business itself this month commented that “the combination of MGM’s leading brands together with GVC’s proprietary technology, and both businesses’ combined betting and gaming expertise, puts the group in the best possible position to benefit from what could become the world’s largest regulated sports-betting market.”

The accord gives GVC operational licence to operate in 15 states with a cumulative addressable population of 90m Americans. It’s early days following the Supreme Court’s recent groundbreaking decision, but leisure industry consultancy firm Global Market Advisors suggests that gross gaming revenues in the country could be worth $9bn.

Great value, growing dividends

At current prices, GVC trades on a forward P/E ratio of 12.1 times which I believe makes the firm a steal. The nature of its operations carries huge regulatory risks, of course, but I believe these fears are overdone and that the market is underestimating the company’s terrific growth possibilities.

Besides, those looking for strong and steady dividend growth should also be interested. Last year’s dividend of 34 euro cents per share has been raised to 39 cents in the current year, resulting in a chunky 3.6% yield. And I’m expecting shareholder payouts, like profits, to keep expanding at a decent pace as the global online betting industry grows.

The post A cheap FTSE 100 dividend growth stock I’d buy and hold for the next decade appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.