888 Surges as Online Gaming Company Presents Income Attractions

  • Stock yielding about 6.7%, double average of All-Share Index
  • 888 sees no immediate need for acquisitions as profit jumps

888 Holdings Plc shares surged in London as the U.K. online gaming company promised more cash to shareholders and said revenue growth shows no sign of slowing.

For a fifth year running, 888 will pay a special dividend, which combined with the ordinary distribution leaves the stock yielding about 6.7 percent, almost double the average of the U.K. FTSE All-Share Index. The shares rose as much as 10 percent.

“There’s no point sitting on the cash,” Chief Executive Itai Frieberger said in a phone interview Tuesday. “If we do, we don’t get any value on that. We’re relatively small and we have enough to do what we want to do.”

Constantly introducing new products and entering new countries has made 888 the U.K.’s top performer among listed consumer-facing gaming operators, according to Investec analysts. Revenue and earnings beat estimates last year, and the company said it’s made a good start in 2017, a year that is likely to see the continuation of a wave of industry consolidation.

Frieberger, who last year teamed up with Rank Group Plc to make an unsuccessful takeover bid for bookmaker William Hill Plc, said 888 has no immediate need for acquisitions.

“The industry is speed dating, but we don’t feel compelled to do a deal right now,” he said. “The results coming out of the business are so strong.”

U.S. Laws

888 shares gained 22.5 pence to 256.5 pence at 11:37 a.m. in London, extending their gain for the year to 18 percent. A possible catalyst for the stock could be a loosening of gaming laws in the U.S., where 888 became the first online gaming company to obtain a license in March 2013.

“This could transform the company,” Frieberger said, adding that 888 is in “pole position” to take advantage should the U.S. decide to relax the rules.

“If nothing were to happen, it wouldn’t affect our share price. But if something were to happen, it will have a dramatic effect.”

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