Paddy Power Net Income dropped on 105% in 2016 while Revenue jumped on 68.0%
07 Mar 2017 • About Paddy Power (
$PAP) • By InTwits
Paddy Power reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Paddy Power doesn't have a profitable business model yet: FY2016 ROIC is 0.6%
- Paddy Power has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 2.6%.
- CAPEX is quite volatile: 22.4 in 2016, 23.5 in 2015, 313 in 2014, 205 in 2013, 180 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Paddy Power ($PAP) key annual financial indicators
| mln. € | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 654 | 745 | 882 | 1,094 | 1,837 | 68.0% |
| Gross Profit | 554 | 617 | 714 | 818 | 1,413 | 72.8% |
| SG&A | 68 | 76 | 101 | 118 | | -100.0% |
| EBITDA | 168 | 177 | 212 | 223 | 315 | 41.4% |
| Net Income | 121 | 123 | 145 | 147 | -7 | -104.7% |
Balance Sheet
|
|---|
| Cash | 171 | 175 | 246 | 152 | 293 | 92.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | -11.0% |
| Long Term Debt | 0 | 0 | 0 | 193 | 250 | 29.4% |
Cash flow
|
|---|
| Capex | 33 | 35 | 39 | 28 | 50 | 79.8% |
Ratios
|
|---|
| Revenue growth | 30.9% | 14.0% | 18.3% | 24.1% | 68.0% | |
| EBITDA growth | -0.4% | 5.2% | 19.8% | 5.2% | 41.4% | |
| Gross Margin | 84.7% | 82.8% | 81.0% | 74.7% | 76.9% | 2.2% |
| EBITDA Margin | 25.7% | 23.7% | 24.0% | 20.4% | 17.2% | -3.2% |
| Net Income Margin | 18.5% | 16.5% | 16.4% | 13.5% | -0.4% | -13.8% |
| SG&A, % of revenue | 10.4% | 10.2% | 11.4% | 10.8% | | -10.8% |
| CAPEX, % of revenue | 5.0% | 4.7% | 4.4% | 2.5% | 2.7% | 0.2% |
| ROIC | 53.4% | 47.2% | 47.6% | 53.2% | 0.6% | -52.6% |
| ROE | 47.6% | 41.9% | 41.5% | 64.6% | -0.3% | -64.8% |
| Net Debt/EBITDA | -1.0x | -1.0x | -1.2x | 0.2x | -0.1x | -0.3x |
Revenue and profitability
Paddy Power's Revenue surged on 68.0% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.8 pp from 10.5% to 13.3% in 2016.
Gross Margin increased on 2.2 pp from 74.7% to 76.9% in FY2016.
Net Income marign dropped on 13.8 pp from 13.5% to -0.38% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.7% in FY2016. The company's CAPEX/Revenue decreased slightly on 2.0 pp from 4.7% in FY2013 to 2.7% in FY2016. It's average CAPEX/Revenue for the last three years was 3.2%.
Return on investment
The company operates at low but positive ROIC (0.65%) and negative ROE (-0.26%). ROIC dropped on 52.6 pp from 53.2% to 0.65% in FY2016. ROE dropped on 64.8 pp from 64.6% to -0.26% in FY2016.
Leverage (Debt)
Debt level is -0.1x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 0.2x to -0.1x in FY2016. Debt jumped on 29.4% in FY2016 while cash surged on 92.0% in FY2016.
Appendix 1: Peers in Travel & Leisure
Below you can find Paddy Power benchmarking vs. other companies in Travel & Leisure industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dalata Hotel Group ($DAL) | | 12.0% | 30.4% | 185.4% | 28.7% |
| Everyman Media Group ($EMAN) | 23.4% | 26.5% | 22.4% | 44.1% | |
| Webis Holdings ($WEB) | | 46.3% | -55.0% | 29.7% | 45.3% |
| Hanatour Service Inc ($TOUR) | | 14.6% | 9.3% | 19.2% | 29.6% |
| Action Hotels ($AHCG) | 12.3% | 5.4% | 26.2% | 15.7% | |
| |
|---|
| Median (23 companies) | 12.3% | 8.2% | 6.1% | 7.6% | 8.3% |
|---|
| Paddy Power ($PAP) | | 14.0% | 18.3% | 24.1% | 68.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclectic Bar Grp ($BAR) | 79.1% | 78.9% | 79.0% | 79.4% | 80.7% |
| Action Hotels ($AHCG) | 75.1% | 75.0% | 73.3% | 74.0% | |
| Dalata Hotel Group ($DAL) | 61.2% | 62.0% | 62.8% | 61.5% | 62.2% |
| Everyman Media Group ($EMAN) | 57.6% | 59.2% | 58.9% | 58.0% | |
| Mandarin Oriental International ($MDOB) | 36.0% | 38.9% | 39.7% | 40.4% | 35.8% |
| |
|---|
| Median (11 companies) | 23.0% | 22.6% | 20.7% | 22.1% | 25.3% |
|---|
| Paddy Power ($PAP) | 84.7% | 82.8% | 81.0% | 74.7% | 76.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Action Hotels ($AHCG) | 31.0% | 27.9% | 28.6% | 34.3% | |
| Air China ($AIRC) | 19.7% | 16.0% | 18.4% | 27.3% | |
| Mandarin Oriental International ($MDOB) | 19.5% | 22.4% | 24.0% | 26.2% | 21.4% |
| Ryanair Hldgs ($RYA) | 22.6% | 21.5% | 20.1% | 25.1% | 28.9% |
| Irish Continental Group ($ICGC) | 17.1% | 18.6% | 27.3% | 23.6% | 25.7% |
| |
|---|
| Median (24 companies) | 12.8% | 12.9% | 12.3% | 12.5% | 16.7% |
|---|
| Paddy Power ($PAP) | 25.7% | 23.7% | 24.0% | 20.4% | 17.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Action Hotels ($AHCG) | 21.0% | 25.6% | 90.0% | 172.4% | |
| Everyman Media Group ($EMAN) | 0.0% | 36.4% | 25.9% | 56.4% | |
| Marston'S ($MARS) | 18.0% | 19.3% | 17.5% | 16.2% | 15.3% |
| Young & Co'S Brewery ($YNGN) | 14.3% | 8.7% | 10.8% | 14.3% | 16.9% |
| Ana Hldgs Inc ($ANA) | 12.8% | 10.1% | 10.5% | 14.1% | 14.1% |
| |
|---|
| Median (24 companies) | 3.7% | 5.4% | 4.6% | 8.5% | 14.7% |
|---|
| Paddy Power ($PAP) | 5.0% | 4.7% | 4.4% | 2.5% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Irish Continental Group ($ICGC) | 14.6% | 18.9% | 40.0% | 33.9% | 30.1% |
| Aer Lingus Group ($AERL) | 3.0% | 3.3% | -11.9% | 31.7% | |
| Air Partner ($AIP) | 34.8% | 27.5% | 21.2% | 20.0% | 20.4% |
| Hanatour Service Inc ($TOUR) | 22.5% | 19.9% | 19.6% | 19.4% | 8.6% |
| Ryanair Hldgs ($RYA) | 9.7% | 10.0% | 9.5% | 13.3% | 17.2% |
| |
|---|
| Median (24 companies) | 6.4% | 6.9% | 4.2% | 5.9% | 6.8% |
|---|
| Paddy Power ($PAP) | 53.4% | 47.2% | 47.6% | 53.2% | 0.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Meikles Ltd ($MIK) | | 5.1x | 10.7x | 73.1x | |
| Action Hotels ($AHCG) | 11.2x | 7.8x | 9.6x | 12.3x | |
| Marston'S ($MARS) | | 6.5x | 14.0x | 8.2x | 6.2x |
| Peel Hotels ($PHO) | 8.2x | 7.3x | 5.9x | 4.4x | 3.9x |
| Rotala ($ROL) | 2.6x | 3.1x | 2.8x | 3.6x | |
| |
|---|
| Median (21 companies) | 1.4x | 2.3x | 1.3x | 2.3x | 2.3x |
|---|
| Paddy Power ($PAP) | -1.0x | -1.0x | -1.2x | 0.2x | -0.1x |
