Aristocrat Leisure has increased its expectation for underlying net profit to around $183m for the six months to 31 March, up 66% on the prior corresponding period. Management expects the business to achieve similar profitability in the second half of the financial year. The good result is thanks to growing market share, particularly in the USA, and strong growth in digital sales.
We have underestimated Aristocrat’s performance over the past couple of years and – with this update in mind – our current valuation is starting to look unduly conservative. We are temporarily removing the price guide and will reinstate it with a fresh set of eyes following a detailed look at the final result, which is to be released on 26 May. For now, we continue to recommend you HOLD.