Irish betting operator Paddy Power is expected to return over €800m surplus cash to shareholders in the coming years, according to Davy Stockbrokers.
The company announced its plan to return €392m in cash to shareholders during its posting of record profits in 2014 earlier this month. Paddy says it hasn’t identified any attractive acquisition and investment opportunities or other uses for surplus cash.
The capital return plan is set for the shareholders’ vote during the company’s annual general meeting on May 14. Paddy’s management said that it is “very confident” that the move will not compromise its future growth.
Davy officially upgraded Paddy Power from “neutral” to “outperform” status on March 30 and said that the company has scope for “material consensus earnings upgrades over time through a combination of better-than-expected top-line growth and scope to expand profit margins.”
“Based on our forecasts, should Paddy Power raise debt at the end of 2016, to correspond to its new target gearing level, we estimate that it could return nearly €800m over two years, between ordinary and special dividends,” said Davy’s David Jennings. “That equates to 21% of its current market capitalization.”
Jennings also said that Paddy Power has been “re-invigorated” by its management changes and new CEO Andy McCue’s new structures.
“We liked the clear and succinct strategy that was laid out at the time of the full-year results, particularly in relation to the group’s priorities from here [online over retail, mobile over desktop, sports over gaming and organic over acquisition],” Jennings added.
The 2015 Paddy Power Poker Irish Open returns on April 3
The Irish Open, Europe’s longest-running poker tournament, will be held on April 3-6.
Now sponsored by Paddy Power, the 2015 edition of the Irish Open costs €3,500 to enter, providing players with 30,000 chips and play to 60-minute blinds.
The 2015 Paddy Power Poker Irish Open will also offer pot limit Omaha, turbo tournaments, Win the Button, an Irish Open Mini and more.