Paddy Power demonstrated healthy growth over the last few years
15 Mar 2016 • About Paddy Power (
$PAP) • By InTwits
Paddy Power is a growth stock in Travel & Leisure industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Paddy Power showed fast growth in the last financial year. The company's revenue surged on 24.1% in FY2015. At the same time Paddy Power well managed its profitability and also showed EBITDA growth of 5.19% for the same period.
In the longer period Paddy Power showed fast revenue growth of 18.7% from 2012 to 2015 annually. EBITDA surged on 9.83% from 2012 to 2015 annually.
Paddy Power ($PAP) financials for the last 5 years
| mln. € | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 499 | 654 | 745 | 882 | 1,094 |
|---|
| Revenue growth, % | | 30.9% | 14.0% | 18.3% | 24.1% |
|---|
| Gross margin, % | 91.2% | 84.7% | 82.8% | 81.0% | 74.7% |
|---|
| SG&A, % | 8.68% | 10.4% | 10.2% | 11.4% | 10.8% |
|---|
| EBITDA | 169 | 168 | 177 | 212 | 223 |
|---|
| EBITDA growth, % | | -0.4% | 5.2% | 19.8% | 5.2% |
|---|
| EBITDA margin, % | 33.8% | 25.7% | 23.7% | 24.0% | 20.4% |
|---|
| Net Income | 121 | 121 | 123 | 145 | 147 |
|---|
| Net Income margin, % | 24.3% | 18.5% | 16.5% | 16.4% | 13.5% |
|---|
| |
| CAPEX | 34 | 33 | 35 | 39 | 28 |
|---|
| CAPEX/Revenue, % | 6.72% | 5.01% | 4.67% | 4.39% | 2.54% |
|---|
| Debt | 0 | 0 | 0 | 0 | 193 |
|---|
| Cash | 111 | 171 | 175 | 246 | 152 |
|---|
| Net Debt/EBITDA | -0.7x | -1.0x | -1.0x | -1.2x | 0.2x |
|---|
| |
| ROIC, % | 58.5% | 53.4% | 47.2% | 47.6% | 53.2% |
|---|
| ROE, % | 53.0% | 47.6% | 41.9% | 41.5% | 64.6% |
|---|
Profitability and return on investment
EBITDA margin declined slightly from 24% in FY2014 to 20.4% in FY2015. In the last 3 years Paddy Power's EBITDA margin dropped on 5.30 pp from 25.7% in 2012 to 20.4% in 2015.
We call Paddy Power an attractive growth stock as together with the growth it delivers high ROIC at 53.2%. Three years ago it was about the same at 53.4%. Average ROIC for the last three years was 49.3%.
The company's Net Income margin dropped on 2.90 pp from 16.4% to 13.5% in 2015. In the longer period the company showed big decline in Net Income margin of 5 pp from 18.5% in 2012 to 13.5% in 2015.
Paddy Power operates at ROE of 64.6%. Average ROE for the last three years was 49.3%.
Capital expenditures (CAPEX)
In FY2015 the company had CAPEX/Revenue of 2.54%. The company showed big decline in CAPEX/Revenue of 2.47 pp from 5.01% in 2012 to 2.54% in 2015. It's average CAPEX/Revenue for the last three years was 3.87%.
Leverage (Debt)
Having such a fast growth profile the company keeps low debt level at 0.2x Net Debt/EBITDA. In the last 3 years leverage surged on 1.20x from -1.02x in 2012 to 0.18x in 2015.
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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Dalata Hotel Group ($DAL) | | 55.4% | 12.0% | 30.4% | 185.4% |
| Action Hotels ($AHCG) | 19.5% | 12.3% | 5.4% | 26.2% | |
| Everyman Media Group ($EMAN) | 23.0% | 23.4% | 26.5% | 22.4% | |
| Eclectic Bar Grp ($BAR) | | 27.6% | 3.8% | 10.5% | -1.9% |
| Richoux Group ($RIC) | 54.2% | 9.4% | 16.5% | 10.4% | |
| |
|---|
| Median (23 companies) | 21.3% | 9.4% | 8.2% | 6.1% | 7.6% |
|---|
| Paddy Power ($PAP) | | 30.9% | 14.0% | 18.3% | 24.1% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Eclectic Bar Grp ($BAR) | 80.1% | 79.1% | 78.9% | 79.0% | 79.4% |
| Action Hotels ($AHCG) | 73.2% | 75.1% | 75.0% | 73.3% | |
| Dalata Hotel Group ($DAL) | 61.8% | 61.2% | 62.0% | 62.8% | 61.5% |
| Everyman Media Group ($EMAN) | 59.9% | 57.6% | 59.2% | 58.9% | |
| Mandarin Oriental International ($MDOB) | 38.6% | 36.0% | 38.9% | 39.7% | 40.4% |
| |
|---|
| Median (11 companies) | 20.4% | 23.0% | 22.6% | 20.7% | 22.1% |
|---|
| Paddy Power ($PAP) | 91.2% | 84.7% | 82.8% | 81.0% | 74.7% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Action Hotels ($AHCG) | 24.0% | 31.0% | 27.9% | 28.6% | |
| Irish Continental Group ($ICGC) | 18.9% | 17.1% | 18.6% | 27.3% | 23.6% |
| Mandarin Oriental International ($MDOB) | 20.9% | 19.5% | 22.4% | 24.0% | 26.2% |
| Young & Co'S Brewery ($YNGN) | 22.3% | 21.2% | 21.8% | 21.7% | 22.9% |
| Ryanair Hldgs ($RYA) | 21.1% | 22.6% | 21.5% | 20.1% | 25.1% |
| |
|---|
| Median (23 companies) | 13.4% | 12.8% | 12.9% | 12.3% | 14.0% |
|---|
| Paddy Power ($PAP) | 33.8% | 25.7% | 23.7% | 24.0% | 20.4% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Action Hotels ($AHCG) | 47.8% | 21.0% | 25.6% | 90.0% | |
| Dalata Hotel Group ($DAL) | 2.0% | 0.7% | 6.2% | 26.7% | 12.7% |
| Everyman Media Group ($EMAN) | 0.0% | 0.0% | 36.4% | 25.9% | |
| Air China ($AIRC) | 23.9% | 16.8% | 19.1% | 18.7% | |
| Marston'S ($MARS) | | 18.0% | 19.3% | 17.5% | 16.2% |
| |
|---|
| Median (23 companies) | 3.4% | 3.7% | 5.4% | 4.6% | 8.5% |
|---|
| Paddy Power ($PAP) | 6.7% | 5.0% | 4.7% | 4.4% | 2.5% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Irish Continental Group ($ICGC) | 14.3% | 14.6% | 18.9% | 40.0% | 33.9% |
| Air Partner ($AIP) | 51.1% | 34.8% | 27.5% | 21.2% | 20.0% |
| Hanatour Service Inc ($TOUR) | 17.4% | 22.5% | 19.9% | 19.6% | 19.4% |
| Netplay Tv ($NPT) | | | 26.3% | 10.2% | |
| Ryanair Hldgs ($RYA) | 7.6% | 9.7% | 10.0% | 9.5% | 13.3% |
| |
|---|
| Median (24 companies) | 7.5% | 6.4% | 6.9% | 4.2% | 5.9% |
|---|
| Paddy Power ($PAP) | 58.5% | 53.4% | 47.2% | 47.6% | 53.2% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Marston'S ($MARS) | | | 6.5x | 14.0x | 8.2x |
| Meikles Ltd ($MIK) | | | 5.1x | 10.7x | 73.1x |
| Action Hotels ($AHCG) | 14.1x | 11.2x | 7.8x | 9.6x | |
| Peel Hotels ($PHO) | 5.8x | 8.2x | 7.3x | 5.9x | 4.4x |
| Air China ($AIRC) | 4.7x | 4.7x | 6.4x | 5.6x | |
| |
|---|
| Median (21 companies) | 1.9x | 1.4x | 2.3x | 1.3x | 2.4x |
|---|
| Paddy Power ($PAP) | -0.7x | -1.0x | -1.0x | -1.2x | 0.2x |
