Why Flutter Entertainment came together today

The online gambling giant Flutter Entertainment (FLUTE 5.57%) was up 6.5% as of 1:24 p.m. ET Wednesday.

You may know Flutter as the parent company of FanDuel, which is a popular fantasy sports website in the US. However, the company also has physical sports betting properties in the US, Ireland and the UK, Australia and other geographies, as well as online betting and casino gaming platforms known as “iGaming”.

Today, Flutter made news at its investor event where it provided guidance for 2027 and unveiled its first buyback program.

Flutter flies on the 2027 guide

At its investor event, Flutter revealed its mid-term guidance for 2027. Management now estimates that the total addressable market for iGaming and online daily fantasy sports will grow at an annualized rate of 8% through 2027 to reach $368 billion dollars in total.

But management also sees Flutter outperforming its end markets, with a revenue target of $21 billion in 2027. That would mark an average annual growth rate of 14%, outpacing peers over the 14, $2 billion in guided revenue management for this year on the second quarter call. back in august.

And it gets better, as Flutter also forecasts seven-point EBITDA margin expansion (earnings before interest, taxes, depreciation and amortization) to 25% as it continues to grow, with management projecting annualized flow growth of free cash of 36% over the next three years, reaching $2.5 billion in 2027.

In addition, Flutter announced a $5 billion share buyback program that it plans to execute starting later this year and rolling out over the next three years. That $5 billion would be roughly 12 percent of the company’s stock at its current market cap.

Investors liked what they heard

Judging by today’s reaction, investors seem to like what they’ve heard. The stock now trades for about 17.2 times its 2027 free cash flow target, which isn’t terribly expensive in the current environment for a diversified leader in a growing market. Flutter looks like an interesting consumer discretionary stock today, especially when interest rates are falling.