Aristocrat Leisure Ltd (ASX: ALL)Share Price and News
About Aristocrat Leisure Ltd
Aristocrat Leisure Ltd, headquartered in North Ryde, Sydney, was founded in 1953 and has grown to become a global leader in gaming technology and digital entertainment.
Historically it has been a manufacturer of gambling slot machines (pokies). Nowadays, it is a more diversified company also producing electronic gaming machines as well as mobile-first, free-to-play games.
Aristocrat Leisure's Company History
Aristocrat Leisure began as a local manufacturer of mechanical gaming machines under the leadership of founder Len Ainsworth. Its first major innovation came with the Clubman machine in the 1950s, which helped shape Australia's pub and club gaming culture.
After several decades of growth, the company listed on the ASX in 1996, cementing its reputation as a staple in Australia's industrial and technology sectors. Aristocrat significantly expanded its international reach in the 2000s, particularly through its entry into the North American market.
In 2014, it acquired Video Gaming Technologies (VGT) for approximately $1.3 billion, boosting its U.S. footprint. A few years later, the acquisitions of Plarium and Big Fish Games for $500 million and $990 million, respectively, marked its ambitious entry into mobile and social gaming.
Future Outlook of Aristocrat Leisure
Looking ahead, Aristocrat's financial and strategic direction places it in a strong position for sustained growth. It boasts a combined TAM of ~$350bn across its different segments. It has a proven track record of growth, showing you can trust it more than you could trust a company without such a track record.
A major development in 2024 was the decision to divest from Plarium Global, which was sold to Sweden's Modern Times Group for up to $1.25 billion. This transaction aligns with the company's refocus on core operations, such as gaming machines and online casino-style content.
The funds from this divestment are expected to be channelled into accelerating growth within the Aristocrat Interactive division, including iLottery and iCasino products.
Moreover, Aristocrat has increased its digital exposure through the acquisition of NeoGames, giving it a stronger footing in regulated real-money gaming markets across North America and Europe. The company is targeting over $1 billion in annual revenue from its online operations, supported by broader sector trends such as increased mobile penetration, digital gambling legalisation in the U.S., and the global shift towards digital leisure consumption.
However, risks remain, including tighter regulations, digital platform competition, and currency impacts, but the company's diversified revenue base and innovation pipeline offer a buffer. Overall, Aristocrat's balance between its physical and digital segments positions it well to weather economic shifts and pursue long-term gains.
Is ALL a Good Stock to Buy?
Aristocrat Leisure Ltd is generally considered an attractive option for investors seeking both stability and growth. It is an ASX 20 company with over 70% of revenue recurring and a TAM of ~$350bn.
Analyst forecasts indicate a 12-month price target ranging between $68.68 and $88.20, with an average target of $78.69, which implies a potential upside of nearly 27%. Although not a high-yield dividend stock, due to being US focused where buybacks are preferred, Aristocrat provides a modest yield of 1.41%, which may appeal to income investors looking for some return while primarily focusing on capital appreciation.
There are a few risks with this one. One is the potential for an economic downturn, something that caused revenues to dip during the GFC, but only slightly. The COVID pandemic called a 26% retreat in revenues, only to rebound to pre-COVID levels in the next year. Despite high inflation, 2022 was a record year for US commercial casino gaming revenue, with the total revenue across the US estimated to be over US $1bn.
Some bigger risks include inflation in respect to costs of game development and geopolitical issues. You see, Russia and Ukraine were both major centres for gaming development and the war between them forced development to move elsewhere. One country was Israel, but even there is not stable right now.
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Frequently Asked Questions
Aristocrat offers a dividend yield of 1.41%. While not high, it suits investors looking for modest income alongside potential capital growth. Recent dividends have been unfranked.