Tabcorp Holdings (ASX:TAH) - Share price, News & Analysis

Q: What is the Fair Price of TAH when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

TAH (A$0.95) is trading above our estimate of [[fair value]] (A$0.91)

TAH fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	0/6
Past Performance	1/6
Financial Health	4/6
Dividends	3/6

TAH Stock Overview

Tabcorp Holdings Limited, together with its subsidiaries, provides gambling and entertainment services in Australia.

Rewards

Price-To-Earnings ratio (8.1x) is below the Australian market (15.6x)

Became profitable this year

Risk Analysis

Highly volatile share price over the past 3 months

Dividend of 13.76% is not well covered by earnings

Large one-off items impacting financial results

Tabcorp Holdings Competitors

Jumbo Interactive

ASX:JIN

AU$893.1m

Lottery

ASX:TLC

AU$10.0b

Aristocrat Leisure

ASX:ALL

AU$23.2b

Ainsworth Game Technology

ASX:AGI

AU$313.2m

Price History & Performance

Summary of all time highs, changes and price drops for Tabcorp Holdings
Historical stock prices
Current Share Price	AU$0.94
52 Week High	AU$5.53
52 Week Low	AU$0.90
Beta	0.91
1 Month Change	-6.90%
3 Month Change	-81.76%
1 Year Change	-80.99%
3 Year Change	-78.67%
5 Year Change	-77.87%
Change since IPO	-60.13%

Shareholder Returns

	TAH	AU Hospitality	AU Market
7D	-3.1%	-0.7%	0.7%
1Y	-81.0%	-26.8%	-8.5%

Return vs Industry: TAH underperformed the Australian Hospitality industry which returned -26.8% over the past year.

Return vs Market: TAH underperformed the Australian Market which returned -8.5% over the past year.

Price Volatility

Is TAH's price volatile compared to industry and market?
TAH volatility
TAH Average Weekly Movement	23.0%
Hospitality Industry Average Movement	7.9%
Market Average Movement	10.6%
10% most volatile stocks in AU Market	18.0%
10% least volatile stocks in AU Market	4.6%

Stable Share Price: TAH is more volatile than 90% of Australian stocks over the past 3 months, typically moving +/- 23% a week.

Volatility Over Time: TAH's weekly volatility has increased from 12% to 23% over the past year.

About the Company

Founded	Employees	CEO	Website
1881	n/a	Adam Rytenskild	https://www.tabcorp.com.au

Tabcorp Holdings Limited, together with its subsidiaries, provides gambling and entertainment services in Australia. The company’s Lotteries and Keno segment is involved in the lottery operations. It has various game brands, including Set for Life, Powerball, Oz Lotto, TattsLotto, Saturday Lotto, Gold Lotto, X Lotto, Monday and Wednesday Lotto, Lucky Lotteries, Lotto Strike, Super 66, Keno, and Instant Scratch-Its.

Tabcorp Holdings Fundamentals Summary

How do Tabcorp Holdings's earnings and revenue compare to its market cap?
TAH fundamental statistics
Market Cap	AU$2.10b
Earnings (TTM)	AU$259.00m
Revenue (TTM)	AU$5.75b

8.1x

P/E Ratio

0.4x

P/S Ratio

Is TAH overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
TAH income statement (TTM)
Revenue	AU$5.75b
Cost of Revenue	AU$0
Gross Profit	AU$5.75b
Other Expenses	AU$5.49b
Earnings	AU$259.00m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 24, 2022

Earnings per share (EPS)	0.12
Gross Margin	100.00%
Net Profit Margin	4.50%
Debt/Equity Ratio	38.1%

How did TAH perform over the long term?

See historical performance and comparison

Dividends

13.8%

Current Dividend Yield

115%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is TAH undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TAH?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for TAH. This is calculated by dividing TAH's market cap by their current preferred multiple.
What is TAH's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$2.10b

TAH key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.7x
Enterprise Value/EBITDA	4.8x
PEG Ratio	10x

Price to Earnings Ratio vs Peers

How does TAH's PE Ratio compare to its peers?

TAH PE Ratio vs Peers

The above table shows the PE ratio for TAH vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	37.8x
JIN Jumbo Interactive	29.6x	15.7%	AU$893.1m
TLC Lottery	43.6x	9.3%	AU$10.0b
ALL Aristocrat Leisure	23.5x	9.4%	AU$23.2b
AGI Ainsworth Game Technology	54.5x	10.7%	AU$313.2m
TAH Tabcorp Holdings	8.1x	0.8%	AU$2.1b

Price-To-Earnings vs Peers: TAH is good value based on its Price-To-Earnings Ratio (8.1x) compared to the peer average (37.8x).

Price to Earnings Ratio vs Industry

How does TAH's PE Ratio compare vs other companies in the Global Hospitality Industry?

Price-To-Earnings vs Industry: TAH is good value based on its Price-To-Earnings Ratio (8.1x) compared to the Global Hospitality industry average (22.1x)

Price to Earnings Ratio vs Fair Ratio

What is TAH's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TAH PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.1x
Fair PE Ratio	23.4x

Price-To-Earnings vs Fair Ratio: TAH is good value based on its Price-To-Earnings Ratio (8.1x) compared to the estimated Fair Price-To-Earnings Ratio (23.4x).

Share Price vs Fair Value

What is the Fair Price of TAH when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TAH (A$0.95) is trading above our estimate of fair value (A$0.91)

Significantly Below Fair Value: TAH is trading above our estimate of fair value.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

Discover undervalued companies

Future Growth

How is Tabcorp Holdings forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

0.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: TAH's forecast earnings growth (0.8% per year) is below the savings rate (1.8%).

Earnings vs Market: TAH's earnings (0.8% per year) are forecast to grow slower than the Australian market (6.1% per year).

High Growth Earnings: TAH's earnings are forecast to grow, but not significantly.

Revenue vs Market: TAH's revenue is expected to decline over the next 3 years (-0.6% per year).

High Growth Revenue: TAH's revenue is forecast to decline over the next 3 years (-0.6% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: TAH's Return on Equity is forecast to be low in 3 years time (4%).

Discover growth companies

Past Performance

How has Tabcorp Holdings performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-20.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TAH has a large one-off loss of A$110.0M impacting its December 31 2021 financial results.

Growing Profit Margin: TAH became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: TAH's earnings have declined by 20.3% per year over the past 5 years.

Accelerating Growth: TAH has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: TAH has become profitable in the last year, making it difficult to compare its past year earnings growth to the Hospitality industry (47.1%).

Return on Equity

High ROE: TAH's Return on Equity (3.8%) is considered low.

Discover strong past performing companies

Financial Health

How is Tabcorp Holdings's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: TAH's short term assets (A$1.2B) do not cover its short term liabilities (A$2.3B).

Long Term Liabilities: TAH's short term assets (A$1.2B) do not cover its long term liabilities (A$3.1B).

Debt to Equity History and Analysis

Debt Level: TAH's net debt to equity ratio (27.4%) is considered satisfactory.

Reducing Debt: TAH's debt to equity ratio has reduced from 96.2% to 38.1% over the past 5 years.

Debt Coverage: TAH's debt is well covered by operating cash flow (22.2%).

Interest Coverage: TAH's interest payments on its debt are well covered by EBIT (4.7x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Tabcorp Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

13.76%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: TAH's dividend (13.76%) is higher than the bottom 25% of dividend payers in the Australian market (2.56%).

High Dividend: TAH's dividend (13.76%) is in the top 25% of dividend payers in the Australian market (6.28%)

Stability and Growth of Payments

Stable Dividend: TAH's dividend payments have been volatile in the past 10 years.

Growing Dividend: TAH's dividend payments have fallen over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (115.5%), TAH's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (71.4%), TAH's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure

CEO

Adam Rytenskild

0.17

Tenure

AU$1,713,000

Compensation

Mr. Adam Rytenskild serves as Managing Director and Chief Executive Officer at Tabcorp Holdings Limited since June 01, 2022. He served as the Managing Director of Wagering and Media at Tabcorp Holdings Ltd...

CEO Compensation Analysis

Compensation vs Market: Adam's total compensation ($USD1.22M) is about average for companies of similar size in the Australian market ($USD1.54M).

Compensation vs Earnings: Adam's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: TAH's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: TAH's board of directors are not considered experienced ( 2.1 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: TAH insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/13 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30