Looking for growth stocks? Pay attention to Paddy Power
10 Mar 2015 • About Paddy Power (
$PAP) • By InTwits
Have you thought about Paddy Power as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Paddy Power showed fast growth in the last financial year. The company's revenue surged on 18.3% in FY2014. The growth also happened in EBITDA of 19.8% for the same period.
In the last 3 years Paddy Power showed fast revenue growth of 20.9% from 2011 to 2014 annually. EBITDA surged on 7.84% from 2011 to 2014 annually.
Paddy Power ($PAP) financials for the last 5 years
| mln. € | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 427 | 499 | 654 | 745 | 882 |
|---|
| Revenue growth, % | | 17.0% | 30.9% | 14.0% | 18.3% |
|---|
| Gross margin, % | 86.2% | 91.2% | 84.7% | 82.8% | 81.0% |
|---|
| SG&A, % | 8.21% | 8.68% | 10.4% | 10.2% | 11.4% |
|---|
| EBITDA | 128 | 169 | 168 | 177 | 212 |
|---|
| EBITDA growth, % | | 31.9% | -0.4% | 5.2% | 19.8% |
|---|
| EBITDA margin, % | 30.0% | 33.8% | 25.7% | 23.7% | 24.0% |
|---|
| Net Income | 90 | 121 | 121 | 123 | 145 |
|---|
| Net Income margin, % | 21.1% | 24.3% | 18.5% | 16.5% | 16.4% |
|---|
| |
| CAPEX | 16 | 34 | 33 | 35 | 39 |
|---|
| CAPEX/Revenue, % | 3.85% | 6.72% | 5.01% | 4.67% | 4.39% |
|---|
| Debt | 5 | 0 | 0 | 0 | 0 |
|---|
| Cash | 140 | 111 | 171 | 175 | 246 |
|---|
| Net Debt/EBITDA | -1.1x | -0.7x | -1.0x | -1.0x | -1.2x |
|---|
| |
| ROIC, % | 47.1% | 58.5% | 53.4% | 47.2% | 47.6% |
|---|
| ROE, % | 46.5% | 53.0% | 47.6% | 41.9% | 41.5% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. EBITDA margin increased slightly on 0.300 pp from 23.7% to 24% in 2014. In the longer period Paddy Power's EBITDA margin dropped on 9.80 pp from 33.8% in 2011 to 24% in 2014.
Paddy Power shows attractive ROIC at 47.6% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 58.5% in FY2011. It's average ROIC for the last three years was 49.4%.
Paddy Power showed small Net Income margin decline of 0.100 pp from 16.5% to 16.4% in 2014. In the last 3 years the company's Net Income margin dropped on 7.90 pp from 24.3% in 2011 to 16.4% in 2014.
Paddy Power operates at ROE of 41.5%. It's average level of ROE for the last three years was 43.7%.
Capital expenditures (CAPEX)
The company's CAPEX/Revenue was 4.39% in FY2014. Paddy Power showed big decline in CAPEX/Revenue of 2.33 pp from 6.72% in 2011 to 4.39% in 2014. For the last three years the average CAPEX/Revenue was 4.69%.
Leverage (Debt)
The company has negative net debt at -1.2x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period the company showed fast leverage growth of 0.50x from -0.66x in 2011 to -1.16x in 2014.
Peers in Travel & Leisure
Below we provide Paddy Power benchmarking against other companies in Travel & Leisure industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Hanatour Service Inc ($TOUR) | | 19.1% | 15.0% | 14.6% | 9.3% |
| Aer Lingus Group ($AERL) | | 6.0% | 8.1% | 2.3% | 9.1% |
| Young & Co'S Brewery ($YNGN) | | 11.8% | 25.5% | 8.2% | 8.8% |
| Ana Hldgs Inc ($ANA) | | 10.5% | 4.0% | 5.1% | 7.9% |
| Fuller Smith & Turner ($BA80) | | | | 7.3% | 6.1% |
| |
|---|
| Median (12 companies) | | 9.1% | 8.4% | 8.5% | 3.6% |
|---|
| Paddy Power ($PAP) | | 17.0% | 30.9% | 14.0% | 18.3% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Ana Hldgs Inc ($ANA) | 14.6% | 21.1% | 23.0% | 22.6% | 20.7% |
| Peel Hotels ($PHO) | 18.6% | 19.6% | 15.4% | 15.8% | 16.4% |
| Air Partner ($AIP) | 8.7% | 9.2% | 9.6% | 10.4% | 10.6% |
| Webis Holdings ($WEB) | 2.3% | 2.9% | 2.8% | 3.2% | 3.8% |
| |
|---|
| Median (4 companies) | 8.7% | 9.2% | 12.5% | 13.1% | 13.5% |
|---|
| Paddy Power ($PAP) | 86.2% | 91.2% | 84.7% | 82.8% | 81.0% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Young & Co'S Brewery ($YNGN) | 22.7% | 22.3% | 21.2% | 21.8% | 21.7% |
| Ryanair Hldgs ($RYA) | 21.3% | 21.1% | 22.6% | 21.5% | 20.1% |
| Fuller Smith & Turner ($BA80) | | | 18.1% | 18.3% | 18.3% |
| Peel Hotels ($PHO) | 14.1% | 15.3% | 10.6% | 11.1% | 12.8% |
| Ana Hldgs Inc ($ANA) | 4.8% | 13.7% | 15.3% | 15.4% | 12.7% |
| |
|---|
| Median (12 companies) | 9.9% | 12.3% | 9.6% | 14.1% | 11.4% |
|---|
| Paddy Power ($PAP) | 30.0% | 33.8% | 25.7% | 23.7% | 24.0% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Marston'S ($MARS) | | | 18.0% | 19.3% | 17.5% |
| Young & Co'S Brewery ($YNGN) | 8.5% | 13.1% | 14.3% | 8.7% | 10.8% |
| Ana Hldgs Inc ($ANA) | 15.2% | 13.9% | 12.8% | 10.1% | 10.5% |
| Ryanair Hldgs ($RYA) | 33.4% | 24.7% | 7.2% | 6.4% | 10.0% |
| Fuller Smith & Turner ($BA80) | | | 8.7% | 6.7% | 9.9% |
| |
|---|
| Median (12 companies) | 5.2% | 2.9% | 3.7% | 4.4% | 4.0% |
|---|
| Paddy Power ($PAP) | 3.9% | 6.7% | 5.0% | 4.7% | 4.4% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Air Partner ($AIP) | 17.7% | 51.1% | 34.8% | 27.5% | 21.2% |
| Hanatour Service Inc ($TOUR) | 25.5% | 17.4% | 22.5% | 19.9% | 19.6% |
| Ryanair Hldgs ($RYA) | 7.3% | 7.6% | 9.7% | 10.0% | 9.5% |
| Fuller Smith & Turner ($BA80) | | | 8.7% | 8.7% | 8.9% |
| Young & Co'S Brewery ($YNGN) | 8.1% | 7.6% | 6.4% | 6.1% | 6.3% |
| |
|---|
| Median (12 companies) | 2.1% | 7.5% | 4.7% | 7.8% | 3.5% |
|---|
| Paddy Power ($PAP) | 47.1% | 58.5% | 53.4% | 47.2% | 47.6% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Marston'S ($MARS) | | | | 6.5x | 14.0x |
| Peel Hotels ($PHO) | 7.4x | 5.8x | 8.2x | 7.3x | 5.9x |
| Ana Hldgs Inc ($ANA) | 15.6x | 4.8x | 4.3x | 3.6x | 4.0x |
| Fuller Smith & Turner ($BA80) | | | 3.0x | 2.7x | 2.7x |
| Young & Co'S Brewery ($YNGN) | 2.2x | 3.9x | 3.1x | 2.7x | 2.4x |
| |
|---|
| Median (10 companies) | 2.1x | 2.0x | 1.4x | 2.2x | 1.9x |
|---|
| Paddy Power ($PAP) | -1.1x | -0.7x | -1.0x | -1.0x | -1.2x |
