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Non-Tech : petal's Swedish stock picks
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From: petal10/21/2024 11:08:15 PM
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Betsson (BETS).

Swedish online gambling company.

Seems just way to cheap to me still. Trading at P/E 9 and EV/EBIT of 6. Valuation should rather be twice or thrice that IMO.

Return On Capital/Equity/Tangible Assets are consistently high. Great history of capital allocation – well timed buybacks (during bottom of covid peak, e.g.) and also spinoffs (in 2005, the company was divided into three separate entities: one was acquired by Evolution Gaming, one was slot machines (bought out) and one is current Betsson). The site Betsson.com was itself acquired in 2003. In 2011, a series of acquisitions began. Now they operate many different brands globally.

The reasons for this very low valuation seems to be twofold:

1) Swedish institutions are (still...) avoiding non-ESG companies like the plague
2) Fear of the big exposure to one market – Turkey – where they aren't allowed to be, legally speaking (but have been for many years and the Turkish gov't doesn't seem to care all that much).

The few comparable companies I can find do indeed trade at much "richer" valuations: Kindred (KIND) at P/E 30, and Better Collective (BETCO) at P/E 40. Betsson seems to me to be as good as these or better.

I'm having trouble finding American (or other) peers to Betsson. Indeed, I'm having trouble finding any peers to Betsson at all, as almost all well-run Swedish gambling co.'s have been bought out. Online gambling companies that make a profit year after year? I can't find any. Indeed, I cannot seem to find neither a "pure play" online gamling co., nor a consistently profitable gambling co – at all.

Please let me know if I just haven't looked closely enough!
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