Next week’s Flutter Entertainment PLC (LSE:FLTR) investor day comes as the Paddy Power and FanDuel-owner faces a big decision on its capital-allocation policy.
Specifically, should the betting powerhouse use its rapidly accelerating US-generated profits to give shareholders a short-term serotonin boost in the form of buybacks, or should it play the long game and pursue more company acquisitions?
Flutter’s M&A strategy has a great track record, but as UBS analysts have noted, there are some grumblings among its shareholder base that they’re not getting a big enough piece of the profit pie.
UBS noted that Flutter’s recent additions, such as NSX Group in Brazil and Snaitech in Italy, were in the “lower-multiple and slower-growing ex-US business, where investors may be sceptical of extensive capital deployment”.
Meanwhile, there is a “growing narrative of potential shareholder returns emerging from Flutter’s management, as indicated by the increase in target leverage from 1-2x to 2-5x cited in Flutter’s annual earnings report in March.
So, will it be buybacks or buyouts on the menu going forward? There may be some answers in store during Flutter’s capital markets day next Wednesday.