William Hill: US Sports Betting Market Presents Unique Opportunity

British bookmaker William Hill's expansion into the U.S. market should enable the company to recover from poor 2018 results, many experts believe.

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The company's shares lost half of their value this past year due to more stringent regulations in the United Kingdom.

William Hill 2018 net revenues come from the United Kingdom retail betting (56%), UK and International online betting (39%), and the US (5%).

While the UK retail market has matured, with little growth rate anticipated, the US betting market remains in its infancy.  Hill is strategically positioned to capitalize there.

From Seeking Alpha:

I see William Hill at the current price as a good opportunity to profit on successful US expansion in the next 5 years. Furthermore, William Hill is offering a nice dividend yield with a minimum dividend commitment from the company.

Rafi Farber of CalvinAyre.com suggests Hill should not be considered a long term buy and hold.

It’s true that William Hill didn’t have its best year in 2018, but a look inside the numbers shows that there aren’t any structural issues here that the company can’t overcome. In fact the situation now looks similar to the 2008 lows when revenues were still up in the context of a collapsing equities market. Shares collapsed 70% in a year while revenues and operating profit were still rising despite the chaos unfolding in the global economy. All the decline really said was that holders of William Hill were being hit by margin calls in other positions and were forced to sell across the board to meet them. That’s not what’s happening now but we still have solid fundamentals in the context of external instabilities due to factors completely out of its control.

Despite the unfavorable investment environment engendered by Brexit myopia and the FOBT fiasco, revenue was still up marginally by 2% and costs of sales fell by 4%. The problem was a £908.8 million impairment charge from the Triennial Review, but that is not a structural issue.

He added:

By 2023, William Hill estimates that EBITDA (Earnings before interest, tax, depreciation and amortization) from the US segment will reach £300 million. That’s almost the entire EBITDA for covenant purposes total for 2018 of £312M. Will the US reach that number? Hard to say, but the point is that the growth opportunities are there and there are no systemic problems here.

- Aaron Goldstein, Gambling911.com