When Flutter Entertainment PLC (LSE:FLTR), the betting company, reports a third-quarter update on Thursday, 9 November it will likely be hoping to echo much of the good from rival Entain’s results while avoiding all of the negatives.
Entain PLC (LSE:ENT), the owner of Ladbrokes and Coral, saw its shares slip by around 4.5% on Thursday after continued “customer-friendly” results continued to eat away at sports margins and therefore underlying earnings.
Third-quarter performance, which saw volumes in line with expectations, allowed for guidance to remain at between £1 billion and £1.05 billion, the betting group said in an update.
Yet, having suffered a £45 million hit due to the adverse betting results, it is “unlikely that the company would be able to mitigate the full impact”, analysts at UBS Group AG (NYSE:UBS) believe.
“However, Entain says that it does not impact their expectations beyond 4Q23,” analysts at the Swiss bank added.
Weaker digital EBITDA margin guidance of between 24% and 25% compared to the market’s consensus of 26% is also weighing on the shares, UBS believes.
Can Flutter do better?
Flutter, which owns Paddy Power and Sky Bet, will probably be unable to avoid taking a hit due to the sporting results, although it will be interesting to see whether it is a bigger or smaller dent than Entain’s.
Although the company hasn’t provided any pre-trading update warnings about weaker sales, the market is certainly bracing for a slowdown, with shares having dropped by close to 15% since July.
Even though shares have slipped for the Betfair owner, it continues to diverge away from Entain, as the stock has risen by close to 17% in 2023, while Entain has dropped by 33%.
Much of this success has come from Flutter's US offering FanDuel, which, according to multiple analysts, is still the king of Stateside betting – although the battle for first place is hotly contested.
DraftKings and FanDuel each has around a 40% share of the key New York betting market, and DraftKings is viewed as being hot on the heels of its first-placed rival in the rest of the US.
Some reports even suggest that DraftKings has drifted up to the top spot.
However, Exane analysts were quick to discourage this, stating: “We have seen many recent headlines claiming DraftKings is now the leader in US online sports betting. The headlines are based on gross revenues, and don't take the material impact of free bets into account.”
Flutter investors will be hoping for more good news for the company's US business, which like Entain's BetMGM venture, is proving to be the key source of positivity now.
Shares in Flutter lifted a little under 1% on Thursday, having opened at 13,150p, while Entain shares opened at around 910p – down 34% in the year to date.