Betting firm Entain PLC (LSE:ENT) is a more attractive buy than rival Flutter Entertainment PLC (LSE:FLTR), according to Shore Capital, despite significantly growing its influence in the US.
Flutter, the owner of brands like Paddy Power and Betfair, has outclassed the Ladbrokes owner in the last twelve months with the former up 88% against Entain’s drop of 0.8% in the same period.
The Irish-based company also outperformed Entain in terms of first-quarter revenue growth, with Flutter posting a 46% increase compared to the Coral owner’s 17% jump.
Broker Shore Capital said: “At Flutter’s current price of £157 per share we see an implied valuation of 10-11x EBITDA for the ex-US operations and up to 5x NGR for [US sportsbook] Fanduel.”
The capital markets company believes these metrics are fair given the betting firm's ability to grow, especially in the US, but added it “continues to see better value in Entain.”
The financial group also observes a 10 times EBITDA multiple for Entain.
However, it argues that the betting group is “towards the low end of its historic trading range and would imply the market is giving little credence to either the prospect for its ‘core’ gaming business or BetMGM”.
BetMGM is Entain’s joint US sportsbook venture, a market both companies have been trying to become profitable in recent years.
Flutter is now looking even more towards the US, with its shareholders voting in favour of a secondary listing in the US.
Peter Jackson, chief executive of Flutter, said: “The strategic and capital markets benefit this will bring to Flutter will position the group well for its next phase of growth.”
Shore Cap rates Flutter a ‘hold’ at 15,645p while Entain, at 1,480p, is a ‘buy’.