According to the report Grand View Research, Inc. , by 2027 the volume global online gambling market will reach 127.3 billion US dollars . Not surprisingly, the Swedish company Evolution Gaming Group AB (EVO:SS) generates impressive profits with its unique, scalable business model.
B2B operator supports many live casinos around the world . His skyrocketing earnings are attracting the attention of potential investors looking to share in the profits.
Main news
- Evolution Gaming Revenue grew by 53% to $669 million in 2020 .
- In 2020 Evolution bought NetEnt and Red Tiger for $2.1 billion .
- Evolution won the award EGR B2B Awards in the nomination " Live Casino Vendor of the Year » in 2020.
What is Evolution Gaming?
Evolution Gaming opened in 2006 when a Swedish group develops, manufactures, markets and licenses fully integrated B2B live casino solutions more than 300 gambling operators .
The company's core business is the live casino market, with the group specializing in the creation and management of live betting rooms. Evolution employs about 7400 people in studios throughout Europe and North America.
The group operates studios in certain states of the United States because the law requires that live casino operators need a physical site in order to offer their services within the state in a legal capacity.
Financial business model
Most of the group's income comes from the 10%-th rate, which it receives from the licenses granted by the online casinos that run its software. Its business model includes financial provisions that allow the group to receive 10 dollars from every 100 dollars earned by online casinos with licensed software.
Also, if an online casino results in a loss when running the software, Evolution is not responsible for any payouts to customers. Evolution licenses its live casino software and tables from major sites such as 888 Casino, Betfair , paddy power , Draft Kings , William Hill , Mr. Green and other real money online casinos.
What you need to know before investing in Evolution Gaming
Evolution Gaming experienced tremendous growth through mergers and acquisitions, which resulted in the acquisition of NetEnt and red tiger . Not only did the revenue increase by 53% to $671 million in 2020 , but the growth in the group's margins demonstrates the broad scalability of its business model.
The Group expects revenue growth due to global demand and opening new regulated market in Colombia , while in soon broad market penetration expected in South America and Africa .
A closer look at the numbers
- Evolution has a current market capitalization of $24.6 billion , and the price-to-sales ratio (P / S) is 36.8, and the EBITDA ratio is 66.7.
- Its EBITDA in 2020 increased by 82% to $397.3M from $218.72M in 2019 , that is, the margin was 59,2% .
- In the financial report group for 2020 also indicated that its fourth-quarter earnings amounted to 96.4 million dollars .
- Profit for the fiscal year amounted to 340.34 million dollars compared to annual income 179 million dollars in 2019.
Should I buy Evolution Gaming shares?
Investing in gambling stocks can generate high returns due to the exponential growth of the industry, expansion into previously limited territories, and the correlation between new technologies and casino offerings.
Potential investors should evaluate the following points and consider whether Evolution's future growth might counteract its premium valuation. If the company succeeds, it could very well be a long-term stock.
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High inventory value
Attitude dynamics price to sales (P/S) equal 36,8, and coefficient EBITDA equal to 66.7, actually lead to a premium valuation at high stock prices.
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Company Overview
The group's five-year outlook looks positive , with expansion planned in the US, resulting in high margins.
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Possible risks
The significant risk is that its market share, as well as the percentage of purchases, will decrease if competitors can match the breadth and scale of the offer. Though the group blocked their licenses for three years, which effectively prevents such a scenario.
The Future of Evolution Gaming Stock
As US states legalize online gambling and market penetration grows, it is more than likely that Evolution sees significant profits in the future .
Demand for live dealer casinos is on the rise due to increased player participation, more players choosing to play online casinos and the global pandemic. Evolution stock could very well be the key to the future of the industry.
Denial of responsibility A: OnlineUnitesStatesCasinos are not financial experts. Past stocks do not guarantee future results. The reader is responsible for any actions with this information.
The Investors Look To Evolution Gaming Stock message first appeared on US online casinos.
Source: onlineunitedstatescasinos.com
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