Stars Group (TSX:TSGI)(NASDAQ:TSG) stock has been a disappointment in 2019.
Things looked bright for the gaming and online gambling giant as we entered the year. The move by the U.S. Supreme Court to strike down a federal ban on sports gambling in May 2018 swung the door open for Stars Group and others to feast on an untapped and highly lucrative market.
The company has made progress in that area, but it has faltered in others. It released its second quarter 2019 results on August 12. Stars Group cut its fiscal year 2019 guidance in the report from a range of $2.64 billion to $2.765 billion down to a range between $2.5 billion and $2.575 billion. It reduced its adjusted earnings per share forecast from $1.87 to $2.11 down to $1.68 to $1.83.
Still, total revenue rose 54.9% year-over-year to $637 million and was up 51.4% in the year-to-date period to $1.21 billion. Adjusted EBITDA has climbed 25.9% year-over-year in the first six months of 2019 to $432 million. U.S. regulatory bodies are moving quickly to legalize sports betting across many more U.S. states in 2019, and Stars Group has already secured aggregate market access to 20 states.
Stars Group boasts a friendly forward price-to-earnings ratio of 8.3 and a price-to-book of 0.9. Shares temporarily dipped into technically oversold territory after its earnings report, whereas it is trending in neutral territory at the time of this writing.
Still, I like Stars Group as a long-term growth stock as it is well-positioned to gain from the massive U.S. sports betting market.
