Fueled by the increasing ownership of smartphones and advancements in game development technologies, the global mobile gaming market has experienced significant growth. According to Pew Research Center, 91% of American citizens own a smartphone, which reflects the growth potential of the mobile gaming industry.

Additionally, as better connection rates with the increasingly popular 5G technology spreads, the market for online mobile gaming is also set to rise. Moreover, technologies like augmented Reality and Virtual Reality have been integrated into mobile gaming in the market, resulting in a growing consumer base.

That being said, the mobile gaming market is forecasted to reach $342.33 billion by 2034, growing at a CAGR of 13.1%. Amid this growth, Playtika Holding Corp. (PLTK) stands out as a titan in the mobile gaming market.

The company’s vast portfolio of casual and social casino-themed games that consumers can enjoy through various web and mobile platforms has significantly enhanced its position in the said industry. PLTK’s shares have surged marginally over the past five days, closing the last trading session at $6.90.

Now, let us delve deeper into the factors that could shape PLTK’s performance in the near future.

Recent Developments

On December 20, 2024, PLTK announced a partnership with International Game Technology PLC (IGT), a global gaming leader, to bring several of IGT’s most popular renowned slot themes to PLTK’s category-leading social casino games.

The partnership offers players an exciting new way to enjoy their favorite casino slots virtually, free of charge. This could enhance PLTK’s consumer growth, strengthening its cash flows.

On November 20, 2024, PLTK completed the acquisition of SuperPlay, a mobile gaming company based in Tel Aviv, Israel and home to hit mobile games Dice Dreams and Domino Dreams.

The acquisition strengthens and expands the company’s portfolio of offerings by including Dice Dreams and Domino Dreams, two very popular games, as well as two additional games under development.

Sound Historical Growth

Over the past three years, PLTK has seen steady, albeit modest, growth in its revenue, achieving a CAGR that reflects gradual improvement. In contrast, the company’s total assets have experienced a more robust expansion, growing at a CAGR of 5.4% during the same period.

Strong Financials

For the fiscal third quarter that ended September 30, 2024, PLTK’s revenues came in at $620.80 million. Its income from operations increased 8.3% year-over-year to $97.50 million.

Additionally, net income and net income per share attributable to common stockholders rose 3.7% and 10% from the previous year’s quarter to $39.30 million and $0.11, respectively. As of September 30, 2024, PLTK’s total current assets amounted to $1.47 billion, compared to $1.35 billion on December 31, 2023.

Mixed Analyst Estimates

Analysts predict PLTK’s revenue and EPS for the fiscal 2025 first quarter (ending March 2025) to increase marginally year-over-year to $652.68 million. Its EPS for the same period is expected to increase 27.9% year-over-year to $0.18.

Moreover, for the full fiscal year ending December 2025, PLTK’s revenue and EPS are forecasted to increase 4.3% and 10.8% year-over-year to $2.62 billion and $0.74, respectively.

High Profitability

PLTK’s trailing-12-month gross profit margin of 72.65% is 38.1% higher than the industry average of 52.60%. Its trailing-12-month EBITDA margin stands at 24.19%, 29.2% higher than the industry average of 18.73%.

In addition, the company boasts a trailing-12-month net income margin of 8.52%, which is 120.1% higher than the sector average of 3.87%. Also, the stock’s trailing-12-month levered FCF margin of 17.33% outperforms the industry average of 8.83% by 96.4%.

Discounted Valuation

PLTK is currently trading at a forward non-GAAP P/E of 7.01x, which is 47.9% lower than the industry average of 13.44x. Moreover, the stock’s forward EV/EBIT multiple stands at 8.36, 46.1% lower than the industry average of 15.50x.

Additionally, it has a forward Price/Sales multiple of 1.02, which is 21.2% lower than the industry average of 1.30x. This indicates that PLTK is undervalued compared to the broader market, offering potential upside for investors.

POWR Ratings Reflects Optimism

PLTK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

PLTK has an A grade for Value, driven by its discounted valuation metrics relative to the industry average. Moreover, it earned a B grade for Quality, supported by profitability measures that exceeded industry benchmarks. The stock also holds a B grade for Stability, in line with its 60-month beta of 0.92.

Within the A-rated Entertainment – Toys & Video Games industry, PLTK is ranked #2 out of 18 stocks. Beyond what is stated above, we have also given PLTK grades for Sentiment, Momentum, and Growth. Get all PLTK ratings here.

Bottom Line

PLTK has proven itself to be a prominent player in the highly competitive mobile gaming market. Fueled by partnerships that have enhanced its portfolio of mobile game offerings, the company is well-positioned to capitalize on the growth prospects of the mobile gaming market.

Given PLTK’s impressive profitability, robust financial performance, attractive valuation, and relatively low volatility, now could be an opportune time to consider adding the stock to your investment portfolio.

How Does Playtika Holding Corp. (PLTK) Stack Up Against Its Peers?

Although PLTK’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these A (Strong Buy) rated stocks from the Entertainment – Toys & Video Games industry:

Electronic Arts Inc. (EA)

DoubleDown Interactive Co., Ltd. (DDI)

PLAYSTUDIOS, Inc. (MYPS)

To explore more A or B-rated Entertainment – Toys & Video Games stocks, click here.

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PLTK shares were unchanged in premarket trading Friday. Year-to-date, PLTK has declined -0.58%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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