Is it now a good time to have a gamble with The Rank Group (LON:RNK) – I think it is a fair bet.
Tomorrow morning the company, which is a leading international gaming, leisure, and entertainment group offering exciting and entertaining customer experiences, in venues or online.
The group’s mission appears to be ‘excite and to entertain’.
Ahead of tomorrow’s AGM Trading Update could buyers of the shares get excited and will they be entertained by seeing the group’s shares react positively.
The Business
To briefly describe the company, it has some 112 casino and bingo venues regularly entertaining its 3.1m active customers, who also use its 80 plus digital brands covering casino, bingo, slots and sports betting.
Grosvenor Casinos is Rank’s casino-led brand that focuses on table and machine gaming, with 51 venues, it is the UK’s largest casino operator.
Mecca is the group’s very well-known bingo brand, its community-based gaming operates in 52 venues, making it the UK’s second largest bingo operation.
Over in Spain, the group has a strong presence with another community-based bingo brand, Enracha, that is currently operating through nine venues.
The group has a strong three-year programme of growth initiatives in place for each of its businesses focused on: cash maximisation in land-based bingo; recovery and growth in the Grosvenor venues business; scaling the digital business both in the UK and internationally and maximising the opportunities of the anticipated land-based legislative reforms for the UK’s casino and bingo sectors.
Management Comment On The Recent Results
CEO John O’Reilly stated that:
“This has been a year of strong financial, operational and strategic progress for Rank. We are continuing to rebuild profitability following the impact of lockdowns and the material inflationary pressures experienced in recent years. Trading continues to improve due to ongoing investment in our people, our products and the facilities within our venues businesses, and the continued development of the proprietary technology which is driving the growth of our digital business.
With some important developments within our proprietary technology now in place, we are increasingly delivering a seamless and tailored cross-channel experience for our customers, leveraging our key area of competitive advantage.
We are well-positioned to take advantage of the much needed land-based reforms which will help to further modernise our casino and bingo propositions to better meet the expectations of today’s customers and we look forward to the Government confirming the timetable for the required secondary legislation.
We have started the new financial year as we finished the previous one, with good momentum across all businesses. With inflation receding, disposable incomes improving, investment continuing to be made in the customer proposition and a strong pipeline of growth initiatives underway, we are confident in the future prospects of the Group.”
In My View
Analysts who follow the group rate the shares as a Buy, with the highest Price Objective for its shares set at 120p compared to the current 86p, at which level the whole group is valued at £400m.
I have seen one analysis suggesting that the fair value for this group’s shares is 136p.
I am impressed that recent ‘insider’ purchases have been sizeable at prices up to nearly 83p a share.
Without any inside knowledge, I take the view that the AGM Trading Update tomorrow morning will be bullish, possibly enough to help to push the group’s shares back over the 100p level.
So, I repeat the question, is this the time to take a gamble with The Rank Group?