Jumbo Interactive: Fiscal 2024 Shaping Up to Be a Bumper Year, but Shares Look Expensive

Shares in no-moat Jumbo Interactive have rallied considerably since the record AUD 200 million Powerball lottery in February 2024, notwithstanding a modest pullback in recent weeks. Jumbo is leveraged to the jackpot lotteries, Powerball and Oz Lotto, strategically timing its marketing spending to take advantage of the frenzy in ticket sales around big jackpots. This is set to translate into a strong year for Jumbo. Transaction volumes are tracking slightly ahead of our full-year forecast in the 10 months to April 2024, and we raise our fiscal 2024 volume forecast by 3%. With our revenue margin assumption unchanged, fiscal 2024 revenue and earnings per share increase by around 3% to AUD 151 million and AUD 0.70, respectively. On our forecasts, Jumbo’s earnings are set to lift almost 35% on fiscal 2023 as lottery volumes rebound from an abnormally soft year.