Brightstar Lottery (NYSE:BRSL): Assessing Valuation After Landmark $2.6B Italy Deal and Major Shareholder Rewards

If you’re watching Brightstar Lottery (NYSE:BRSL), the past week has given you plenty to talk about. The company just renewed its $2.6 billion lottery contract in Italy, a crucial deal that could act as a springboard into new digital verticals like iGaming and online sports betting across Europe. On top of this, Brightstar rolled out $1.1 billion in shareholder rewards through a hefty share buyback and a special dividend, putting real capital back in investor pockets. For anyone on the fence about BRSL, these back-to-back moves signal that management is doubling down on both growth and value creation.

Looking at the bigger picture, Brightstar Lottery’s share price has edged higher over the past month and three months, suggesting some renewed momentum after a tough start to the year. While year-to-date returns remain slightly negative, the longer-term chart looks more encouraging, with strong three- and five-year total returns. This latest flurry of deals and capital returns has likely reset expectations and brought some optimism into the stock’s outlook again.

With fresh deals on the table and capital flowing back to shareholders, is BRSL an undervalued opportunity right now, or are markets simply pricing in all the future growth?

Most Popular Narrative: 7.5% Undervalued

According to the most widely followed narrative, Brightstar Lottery shares are seen as undervalued by 7.5% versus fair value, based on projected long-term revenue growth, margin expansion, and recent contract wins.

Ongoing investment in proprietary digital platforms (including the MYLOTTERIES app and integrated OMNIA solution) is reducing customer acquisition costs while bolstering direct-to-consumer engagement. This suggests further net margin expansion as platform scale and technology investments pay off.

This is not your typical lottery stock story. Imagine a scenario where lasting industry changes electrify both the top and bottom line. Want to know which powerful growth levers and bold profitability targets are hidden beneath that fair value estimate? The secret sauce is only a click away.

Result: Fair Value of $18.52 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unpredictable regulatory changes or a slowdown in Italian market growth could quickly challenge these optimistic projections and reduce long-term earnings momentum.

Find out about the key risks to this Brightstar Lottery narrative.

Another View: What Does Our DCF Model Say?

Looking through the lens of our DCF model, a different picture emerges. Unlike the narrative that points to undervaluation, this approach suggests BRSL is currently trading above its fair value. Could the market be pricing in too much optimism, or does it know something the model does not?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Brightstar Lottery for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Brightstar Lottery Narrative

If you have a different perspective, or simply enjoy digging into the numbers yourself, you can shape a personal view of BRSL’s outlook in just minutes. Do it your way

A great starting point for your Brightstar Lottery research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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