Stars Group (TSX:TSGI)(NASDAQ:TSG) stock had a rough start to 2019, but it has erupted in the final quarter of the year. The company’s prospects took a positive turn in the eyes of analysts after it was announced that it would partner with Flutter Entertainment, an Ireland-based bookmaker.
This proposed partnership will grant Stars Group more resources as it moves more aggressively into the United States market.
Shares of Stars Group soared to all-time highs in the late spring of 2018 on the back of a huge breakthrough for the gaming industry. In May 2018 the U.S. Supreme Court struck down a 1992 federal ban on sports betting. This burst the door open for the multi-billion-dollar industry south of the border.
In September, Stars Group began to ramp up this strategy. It has already forged a promising partnership with FOX Sports. FOX Bet launched in New Jersey and Pennsylvania in September. There are expected to be more states to follow as federal legislation looks less and less likely.
The company released its third-quarter 2019 results on November 7. In the year-to-date period, revenue has climbed 33.7% year-over-year to $1.84 billion and gross profit has jumped 23.5% to $1.33 billion.
Adjusted EBITDA has increased 24.1% to $672 million.
Stars Group stock has climbed 48.9% over the past three months as of close on December 9. Still, it is trading roughly $20 off its all-time high that it reached in the middle of 2018. The stock had an RSI of 67 at the time of this writing, putting it just outside of technically overbought territory.
I love Stars Group as a long-term play, but value investors may want to wait for a more attractive entry point as we gear up for 2020.
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