Flutter Selloff Could Become Buying Opportunity

Posted on: March 10, 2025, 03:30h. 

Last updated on: March 10, 2025, 03:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Flutter holds leading positions in the US and around the world
  • Investment thesis buoyed by strong balance sheet

Like other gaming stocks, Flutter Entertainment (NYSE: FLUT) is being hammered in a tariff-induced selloff that’s rocking US equities. That punishment continued Monday with shares of the FanDuel parent closing down by 8.36%, but some analysts remain bullish on the gaming name.

Flutter Entertainment
An image from a Flutter office. Morningstar says the stock is trading at a discount to fair value. (Image: Office Snapshots)

In a new report, Morningstar analyst Dan Wasiolek highlights Flutter’s deep product portfolio, enviable brand recognition, and superior technology as fundamental factors bolstering the investment thesis — one that could become compelling with the shares lower by 15% year-to-date.

In the US, Flutter has extended its leading daily fantasy sports position, first established in 2009, into the top position in the US sports betting and iGaming market, with the company holding 36% revenue share in the states where it is active,” observes Wasiolek.

Flutter’s dominant perch in the US comes by way of FanDuel, in which it controls 95%. By market share, FanDuel is the top internet casino and online sportsbook operator in the US.

Flutter’s Fabulous Finances Support Outlook

When it delivered fourth-quarter results last week, Flutter noted it concluded 2024 with $1.53 billion in cash and cash equivalents and $48 million in restricted cash while telling investors its leverage ratio declined to 2.2x from 3.1x at the end of 2023.

For this year, the operator forecast more than $650 million in cash flow from operating activities. That cash flow supports Flutter’s share repurchase activity, which is expected to reach $350 million in the current quarter, up to $300 million in the second quarter, and as much as $1 billion this year.

“The healthy balance sheet should allow the company to invest behind its business organically and through acquisitions, which we see as a good allocation of capital, given the attractive industry growth opportunity,” adds Wasiolek. “We would view share repurchases as a good allocation of capital only if below our intrinsic value. We model a total of about $6 billion in share repurchases over the next four years.”

Should that $6 billion prove accurate, it would be 20% more than the $5 billion share buyback program announced by the Paddy Power owner last year.

Flutter Stock Trading at Deep Discount

US investors mostly view Flutter as the parent of FanDuel, which is an accurate assessment and one that explains the company’s decision to move its primary listing to New York.

However, that view doesn’t account for the operator’s leading positions in markets such as Australia, continental Europe, and the UK — a trait not possessed by many of its domestically focused rivals. Add to that, the stuck now appears attractive on valuation.

“After reviewing Flutter’s fourth-quarter results, we have increased our fair value estimate to $279 per share from $275 for the time value of money. Our valuation implies a 16 times 2025 enterprise value/adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple,” concludes Wasiolek.

That fair value estimate implies upside of 22.6% from today’s closing price.