AI Automation And Global Expansion Will Revitalize Hospitality Markets

Key Takeaways

• Investment in automation, personalized technology, and asset-light strategies is driving operational efficiency, marketing returns, and scalable growth across markets.
  
• International expansion and new, differentiated products are reducing geographic risk and supporting stable, long-term revenue and earnings growth.
  
• High leverage, regulatory risks, structural retail challenges, limited geographic diversification, and unproven product-led growth strategies threaten profitability, revenue stability, and long-term earnings potential.

Catalysts

Operates as a betting and gaming company in the United Kingdom, Italy, Spain, Romania, Denmark, and internationally.

• Ongoing investment in AI-driven automation and operational excellence initiatives is expected to compound over time, driving sustained improvement in operational efficiency and net margins.
  
• Strategic rollout of new gaming machines and product upgrades across core retail locations positions Evoke to capitalize on growing demand for differentiated and premium hospitality experiences, supporting long-term revenue and earnings growth.
  
• Strong international performance and continued expansion into high-barrier, emerging markets (e.g., Romania) help diversify revenue streams and reduce geographic dependence, laying the groundwork for top-line revenue growth and greater earnings stability.
  
• Brand licensing and asset-light market entry strategies (such as the ComeOn deal in the Netherlands) enable Evoke to leverage recognized brands without significant capital outlay, enhancing scalability and ROIC over the long run.
  
• Increased focus on technology-led customer personalization and efficient, data-driven marketing is reducing churn and improving returns on marketing spend, supporting both revenue growth and expanding operating margins.

Evoke Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Evoke's revenue will grow by 5.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -6.4% today to 8.3% in 3 years time.
• Analysts expect earnings to reach £171.9 million (and earnings per share of £0.27) by about September 2028, up from £-113.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 4.3x on those 2028 earnings, up from -2.2x today. This future PE is lower than the current PE for the GB Hospitality industry at 16.9x.
• Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 17.04%, as per the Simply Wall St company report.

Evoke Future Earnings Per Share Growth

Risks

• Continued high leverage (5x as of June, with a 2027 target of below 3.5x) means Evoke faces a prolonged period of significant debt servicing, making the company vulnerable to rising interest rates, tightening liquidity, and reducing flexibility for reinvestment or shareholder returns, which could pressure net margins and delay earnings growth.
  
• Incremental tax or regulatory changes (e.g., potential increase in UK gaming duties in 2027, as discussed but not yet factored into plans) present material risk to future profitability, since substantial tax hikes may not be able to be offset through cost mitigation, directly impacting net income and margins.
  
• UK retail business faces structural headwinds from declining high street footfall and ongoing cost pressures (NIC and National Living Wage increases), making improvement in retail revenue and profitability highly dependent on product initiatives that may not fully combat these long-term secular trends.
  
• The strategy of focusing on core existing markets with high barriers to entry slows geographic diversification, increasing exposure to adverse regulatory or economic developments in key regions, and potentially exacerbating revenue volatility and limiting top-line growth.
  
• The shift toward more product-led rather than promotion-led marketing means Evoke's brands (notably 888) are experiencing short-term revenue declines, and if new customer propositions fail to revive growth, this could lead to stagnation or loss of market share, weighing on future revenue and EBITDA.

Valuation

• The analysts have a consensus price target of £1.016 for Evoke based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £1.1, and the most bearish reporting a price target of just £0.82.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £2.1 billion, earnings will come to £171.9 million, and it would be trading on a PE ratio of 4.3x, assuming you use a discount rate of 17.0%.
• Given the current share price of £0.55, the analyst price target of £1.02 is 46.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.