"eBet is experiencing strong growth in Victoria (its traditionally focused on New South Wales and Queensland) and management is tipping an up to 60% increase in pre-tax profit of between $5.5 million to $5.8 million for the current financial year ending June 30, 2015.
That is well ahead of my forecast of $4.5 million, and if I upgrade the profit number to the bottom end of the guidance range, my discounted cash flow (DCF) valuation jumps to $4.71 from $4.55 a share.
The stock surged 9.5% to $3.70 and is trading on an undemanding P/E of around 14x based on my estimates.
The P/E will drop to just 11.6x in 2015-16 and that makes eBet a good punt in my books."
ITQ Price at posting:
$3.81 Sentiment: Hold Disclosure: Held
