Tabcorp Holdings Ltd (ASX: TAH) shares have surged as much as 20% in early trade after the company easily surpassed analysts’ expectations for half-year net profit.
The company said in a statement to the ASX on Wednesday that group revenue was a modest 1% higher at $1.345 billion, while EBITDA before significant items was $2178.4 million, up 14.3%.
The statutory net profit before significant items came in at $35.7 million, up 61.5%.
A solid set of numbers
The team at Jarden has had a look at the result and said that the adjusted net profit figure was a hefty 34% higher than consensus estimates, while the unfranked interim dividend of 1.5 cents, up from 1 cent, was also a positive surprise.
Jarden has an overweight rating on the stock and a price target of 95 cents.
Tabcorp Holdings shares traded as high as $1.02 early on Wednesday, up 20%, before settling back to be 15.9% higher at 98.5 cents.
Cost control the key
Tabcorp Managing Director Gillon McLachlan said the company was “executing on our game plan while delivering ongoing cost and capital discipline”.
He added:
There’s greater depth in our business. I’m proud we’ve delivered double digit earnings growth in a half where wagering operators were impacted by a run of low yields during the Footy Finals and Spring Racing Carnival. We have been able to absorb this through strong execution by the team, particularly on the cost side, and through the diversity in our business. “Through TAB and SKY, our digital, retail and media assets are more closely connected, creating a genuine omnichannel experience for our customers and I expect that to evolve further in the second half of the year. TAB Takeover, TAB Time, Mega Pot and Miss By One products are examples of the differentiation we are creating. “There’s more to do and we’re not where we want to be yet, but we have made significant progress in the first half, and we will remain relentless in executing on our strategy in the second half and beyond.
Tabcorp’s net debt was $631.2 million at the end of the half, with the company saying its strong balance sheet put it in a good position to pursue growth opportunities.
No comment was made about Tabcorp’s takeover approach to Betmakers, which the smaller company confirmed earlier this month had happened.
The company will pay its dividend on March 24 to shareholders on the register on March 3.
Tabcorp was valued at $1.95 billion at the close of trade on Tuesday.
The post Tabcorp shares surge higher after net profit smashes expectations appeared first on The Motley Fool Australia.
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More reading
- Tabcorp FY26 half-year result: Earnings grow, dividends rise
- Betmakers confirms Tabcorp takeover approach
Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.