Tabcorp Holdings

TABCORP Holdings is under Algo Engine sell conditions.

Tabcorp is a low-growth, mature business and is facing a challenging earnings backdrop, with the retail venue closures and an uncertain sports betting outlook.

At 20x FY22 earnings, the stock is also expensive based on historical multiples. The dividend yield appears attractive but is reliant on an unsustainable payout ratio.

Tabcorp – Algo Update

Tabcorp Holdings, (TAH), 1H19 result showed EBITDA at $360m and 1H NPAT at $132m. These numbers were slightly below consensus. There appears a willingness to reinvesting Lotteries’ based income, into the Wagering business to defend and grow market share.

Cost synergy savings from the Tatts merger was raised to $130-145m, which should help to underpin the stock.

Tabcorp now trades on  a forward yield of 5% and we expect EPS growth to track in the 5 – 6% range.  We note the recent Algo Engine sell signal going into yesterday’s earnings release.





Look For A Bounce In Tabcorp

It’s been estimated that over $250 million was wagered on yesterday’s Melbourne Cup.

It’s reasonable to believe that many punters would have placed bets using one of the TAH platforms.

TAH has been an enigma for investors over the last three months as the share price has traded in a narrow $4.50 to $5.00 price band.

It’s worth remembering that TAH reported a 71% jump in earnings in their last update and is currently priced at a 4.60% yield.

TAH is part of our ASX top 100 portfolio and we suggest accumulating shares at current levels for a move back over $5.25 over the medium-term