Inspired Entertainment, Inc. (NASDAQ: INSE)

Sector: Consumer Cyclical Industry: Gambling CIK: 0001615063
Market Cap 239.44 Mn
P/B -26.60
P/E 4.33
P/S 0.78
ROIC (Qtr) 5.87
Div Yield % 0.00
Rev 1y % (Qtr) 11.66
Total Debt (Qtr) 375.80 Mn
Debt/Equity (Qtr) -41.76
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About

Inspired Entertainment, Inc., a global gaming technology company, trades on the NASDAQ under the symbol INSE and has an equity market capitalization of approximately $259.0 million as of December 31, 2023. The company operates in the gaming, betting, and lottery industries, with a focus on supplying content, platform, and other products and services to regulated operators worldwide. Inspired Entertainment's main business activities encompass four segments: Gaming, Virtual Sports, Interactive, and Leisure. The Gaming segment provides gaming terminals...

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Investment thesis

Bull case

  • Healthy cash reserves of 36.30M provide 4.43x coverage of short-term debt 8.20M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 387M provide exceptional 16.75x coverage of deferred revenue 23.10M, showing strong service capability backing.
  • Robust tangible asset base of 387M provides 4.33x coverage of working capital 89.30M, indicating strong operational backing.
  • Retained earnings of (451.30M) represent substantial 50.14x of equity (9M), indicating strong internal capital generation.
  • Operating cash flow of 57.70M provides strong 6.48x coverage of tax liabilities 8.90M, showing excellent fiscal position.

Bear case

  • Operating cash flow of 57.70M barely covers its investment activities of (52.80M), with a coverage ratio of -1.09, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 57.70M provides minimal -0.97x coverage of tax expenses of (59.60M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 7.60M provides weak coverage of capital expenditures of 50.10M, with a 0.15 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 30.80M show weak coverage of depreciation charges of 54.90M, with a 0.56 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 54.90M relative to operating cash flow of 57.70M, which is 0.95x suggests significant maintenance capital requirements affecting free cash flow.

Product and Service Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Gambling
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FLUT Flutter Entertainment plc 29.14 Bn -96.80 1.89 12.68 Bn
2 DKNG DraftKings Inc. 8.38 Bn 2,259.00 1.38 1.89 Bn
3 CHDN Churchill Downs Inc 6.54 Bn 15.85 2.45 5.11 Bn
4 SGHC Super Group (SGHC) Ltd 4.77 Bn 18.81 1.88 0.08 Bn
5 BRSL Brightstar Lottery PLC 2.79 Bn -19.68 0.50 5.13 Bn
6 RSI Rush Street Interactive, Inc. 1.54 Bn 51.33 1.45 0.00 Bn
7 ACEL Accel Entertainment, Inc. 0.92 Bn 21.02 0.70 0.60 Bn
8 CDRO Codere Online Luxembourg, S.A. 0.30 Bn 251.54 1.25 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.20 1.38
EV to Cash from Ops. EV/CFO 10.09 9.12
EV to Debt EV to Debt 1.55 10.53
EV to EBIT EV/EBIT 18.91 41.15
EV to EBITDA EV/EBITDA 6.86 12.35
EV to Free Cash Flow [EV/FCF] EV/FCF 76.62 20.81
EV to Market Cap EV to Market Cap 2.43 -0.89
EV to Revenue EV/Rev 1.90 1.79
Price to Book Value [P/B] P/B -26.60 2.35
Price to Earnings [P/E] P/E 4.33 170.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.72
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 20.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.30
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 45.34
Interest Coverage Int. cover (Qtr) 0.88 -4.66
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -11.09 -6.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.55 43.20
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 34.14
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -615.42 339.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 18.74 59.74
EBIT Growth (1y) % EBIT 1y % (Qtr) 16.23 40.42
EBT Growth (1y) % EBT 1y % (Qtr) -330.00 9.08
EPS Growth (1y) % EPS 1y % (Qtr) 2,255.56 463.23
FCF Growth (1y) % FCF 1y % (Qtr) 188.37 -118.03
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.09 16.12
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.63 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.08
Cash Ratio Cash Ratio (Qtr) 0.33 0.74
Current Ratio Curr Ratio (Qtr) 1.82 1.04
Debt to Equity Ratio Debt/Equity (Qtr) -41.76 -2.16
Interest Cover Ratio Int Coverage (Qtr) 0.88 -4.66
Times Interest Earned Times Interest Earned (Qtr) 0.88 -4.66
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 27.90 -104.37
EBIT Margin % EBIT Margin % (Qtr) 10.02 -142.35
EBT Margin % EBT Margin % (Qtr) -1.40 -146.31
Gross Margin % Gross Margin % (Qtr) 69.90 44.07
Net Profit Margin % Net Margin % (Qtr) 18.00 -145.36