A stock’s performance is made up of two components, capital gains and dividend yield. OPAP stock has underperformed relative to GDT in various historical periods when dividend payments are not taken into account. Conversely, if the dividend yield is added to the capital return of an OPAP share, it beats the total return of the GDT (an index where the dividends of stocks included in the GDT are included).
OPAP reported its first-quarter financial results in the high range of market estimates and even slightly above. I won’t get into the results because they’re well known, but it’s worth highlighting the company’s strong cash position, with net debt/LTM (last 12 months) EBITDA of 0.1x (0.03x including leases). Virtually unbreakable!
An important milestone of OPAP is the new digital interactive entertainment center, OPAPonline.gr, although not within the first quarter of 2023 (April 3, 2023), which offers online the full range of lottery games (digitally), which, in addition To Joker, it now includes KINO, LOTTO, PROTO, and SUPER 3. Market estimates speak of a small single-digit contribution to pool turnover, while estimates gradually rise in the future.
Along with announcing financial results for the first quarter of 2023, management reported its estimates for 2023. More specifically, it said gross gaming revenue (GGR) would range from €2.06 billion to €2.14 billion, while EBITDA ranged from 740 to 760. million euros (+). Management plans to update its estimates for 2023 in its first-half financial results announcement, which will take place on September 4, 2023.
It is reported that gs OPAP has approved an expected but impressive dividend, totaling €1.45 per share. Specifically, €0.70 per share with a cut-off date of June 6 and a capital return of €0.45 per share with a cut-off date of June 19, thus a dividend of €1.15 per share. Let’s not forget that OPAP distributed an interim dividend in November 2022, thus shaping the final dividend yield for 2022 at an impressive 9%.
OPAP stock is trading at 7.9x 2023 EBITDA on an EV/EBITDA basis, with a discount to the 10-year average close to 20%! At the same time, the price-to-earnings (P/E) ratio in 2022 was 8.1 in 2022!
In conclusion, value stocks like OPAP usually have an attractive earnings multiple because they offer stability in their earnings. In this context, OPAP, with annual earnings growth rates of around 7%-10%, could justify a P/E of just over 10 times net earnings. This will cause the share price to grow by 10% annually while keeping the P/E ratio constant (since the denominator is also growing by 10%). If the dividend yield is added to this, we understand that OPAP’s annual yield of the order of 20% is beyond realistic!
Finally, the average annual return of OPAP over the past 10 years confirms the above theory, being 20%! Thus, doubling the capital, which is a significant return, is achieved in only 3 years and 7 months! The above returns can only come from a long-term investment in risky stocks. no pain no gain!
The superiority of Nasdaq and “artificial intelligence”
In recent weeks, the Nasdaq has had a clear edge over the rest of the market, with tech companies massively outperforming the Dow Jones and the Standard & Poor’s 500. Artificial intelligence seems to be getting some investors’ attention, especially on the other side of the Atlantic.
Given the growing interest, Facttest investigated the number of times S&P 500 executives mentioned the word “artificial intelligence” or “AI” during their first-quarter 2023 earnings calls.
Of those companies, 110 companies reported that the term “artificial intelligence” is well above the five-year average of 57 times and 34 times the 10-year average. It is true that it is the highest number in the last 10 years or more, but it makes sense, because the development of technology is moving at high speeds. The previous high was reached in the fourth quarter of 2022!
As expected, at the sectoral level, IT leads the way with 38 reports, 17 of which are for industry and 15 for telecom services. The proportion in telcos (including Meta Platforms, formerly Facebook) is impressive, with 75% of companies mentioning the word “AI”, while in IT 66%.
Piraeus and the Aegean Sea are the top performers both in May and in the five months
I often wonder about the usefulness of past performance as a guide to the future. It’s a way that doesn’t turn me on. But at the current juncture, stock market insiders have already begun debating which stocks have been lagging behind, and which ones are next, which are ranked based on the remarkable shift in interest. Of course, the outcome of the elections played a role in all this, while the upcoming elections are expected to leave their mark once again on AX.
In this context, the month of May closed at a rate of 12.3%, compared to 2.9% in April. The highest returns in the five months of 2023 among the stocks that make up the FTSE Large Cap belong to Piraeus +92%, Aegean +89% and National Bank +55%. Piraeus and the Aegean Sea were the best performers in May as well. Despite the positive weather in the fifth month, EYDAP, OTE and TERNA Energy closed with losses of 4%, 2% and 1%, respectively.
A highlight of the five months is the fact that the banking sector, with +49%, remains the leading sector after financial services, which is +84% due to MIG, while the third place is occupied by the industrial products and services sector, with +45%, mainly due to Mytilene. Only the telecom sector is in the red, with losses of 1.7%.
Midcap stocks all closed with gains in the fifth month, while Cenergy stood out +88% (which will jump in a few days to the FTSE Large Cap), HEXA (+58%) and Avax (+50%).
Finally, the average daily turnover of A. in May was €118m, boosted by 36% compared to April 2023 and +7.5% compared to May 2022. The comparison with May 2022 clearly has more substance, as it takes in Consideration ‘in light of the MSCI review where the turnover in this year’s review (31/5/2023) jumped to 321 million euros.
Agenda (6/6/2023 – 11/6/2023)
Focus on Fitch (investment grade?) and Q1 GDP
Today, Tuesday, OPAP shares (0.70 € / share) will be traded without the right to a 2022 dividend, while the Bank of Greece announces bank deposit and loan rates for the month of April. On Wednesday, OTE, Motor Oil, Jumbo, Loulis Food and Performance Technologies held an ordinary general meeting, while ELSTAT is expected to report change in GDP for the first quarter of 2023. (+dividend, discontinuation) held a general meeting Ordinary, while Premia Properties will trade without the right to a dividend for 2022. On Friday, Entersoft shares will be trading without the right to a dividend for 2022, EYDAP (Special Meeting of Minority Shareholders), Karelia, Kekrops and Euroadvisers held a meeting, while it is expected that ELSTAT publishes inflation for the month of May. Finally, on Friday after the meeting concluded, Fitch (current rating BB+ and stable outlook) announced the rating for our country, with Greece one notch behind investment grade. The next scheduled rating is expected on August 4 through Scope Ratings.
Ltd. Micro-macro news scheduled for next week abroad
Abroad On Tuesday, Germany will publish Factory Orders for April. Germany’s industrial production for April will be released on Wednesday. On Thursday, the Eurozone’s first-quarter GDP change-adjusted figures were released, while the Brazilian market will remain closed for a public holiday. On Friday morning, China’s inflation for the month of May was announced.
* Demosthenes Tryngas is a BETA Stock Exchange Certified Stock & Market Analyst – [email protected]
** Republished from Kefalio Newspaper
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