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La Francaise des Jeux SA (FR:FDJU)
:FDJU
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La Francaise des Jeux SA
(FDJU)
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Rating:56Neutral
Price Target:
€25.00
▲(8.98% Upside)
Action:ReiteratedDate:02/20/26
Overall score reflects mid-range fundamentals: strong cash generation and shareholder returns are tempered by higher leverage and weakened reported profitability. Technicals show a recent rebound but with overbought signals and price still below the 200-day average. The earnings call adds cautious support via cost-efficiency actions and dividend policy, but sizable tax/regulatory headwinds and OBG margin pressure constrain the outlook.
Positive Factors
Cash generation quality
FDJ’s record FCF (€782m) and 87% recurring EBITDA-to-cash conversion show durable cash generation. High conversion supports a persistent ability to fund capex, dividends and debt reduction, providing financial flexibility to absorb regulatory shocks and invest in digital growth.
Core lottery (LSF) resilience
The France lottery & retail sports business delivers steady GGR and high margins (36%), with accelerating online mix (>15%) and 6m+ players. This entrenched, high-margin franchise and retail reach underpin stable long-term cash flows and lower susceptibility to international sports volatility.
Integration and efficiency gains
Completion of Kindred integration, marketing automation and an upgraded €150m efficiency target indicate structural cost improvements. Realized and planned savings improve operating leverage and margin durability, helping offset tax/regulatory pressure over the medium term.
Negative Factors
Heightened tax & regulatory burden
Large incremental gaming and advertising taxes (multi-country) are a structural margin headwind. A recurring higher tax base materially reduces net gaming revenue and EBITDA potential, limiting sustainable profitability and forcing reliance on cost saves to preserve returns.
Elevated leverage and weaker equity
Leverage jumping to ~2x equity with declining equity cushions raises financial risk and reduces strategic flexibility. Even with modest net-debt reduction targets, elevated leverage heightens vulnerability to earnings volatility and leaves less room for M&A or cyclical cushioning.
OBG unit margin deterioration
The sports-betting/OBG segment shows structural challenges: declining activity, sharp margin compression and a high fixed-cost base (~2/3 fixed). Persistent underperformance increases earnings volatility and limits group margin recovery until operating leverage and product dynamics improve.
La Francaise des Jeux SA (FDJU) vs. iShares MSCI France ETF (EWQ)
Market Cap
€4.67B
Dividend Yield8.77%
Average Volume (3M)338.27K
Price to Earnings (P/E)24.9
Beta (1Y)0.48
Revenue Growth26.91%
EPS Growth-28.35%
CountryFR
Employees5,678
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)1.43
Shares Outstanding185,270,000
10 Day Avg. Volume394,593
30 Day Avg. Volume338,269
Financial Highlights & Ratios
PEG Ratio-0.44
Price to Book (P/B)4.49
Price to Sales (P/S)1.19
P/FCF Ratio8.82
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
€28.05Price Target Upside22.28% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)2.52
Revenue Forecast (FY)€3.76B
La Francaise des Jeux SA Business Overview & Revenue Model
Company DescriptionFDJ United engages in the gaming operation and distribution business in France and internationally. The company operates through Lottery; Sports Betting and Online Gaming Open to Competition; and Other Activities segments. It offers lottery games, such as draw games and instant games at points of sale and online; sports betting at points of sale; and online sports betting, horse-race betting, poker, and casino gaming under Unibet and 32Red brands, as well as undertakes local collection and payment services business; and printing of lottery tickets. The company was formerly known as La Française des Jeux Société anonyme and changed its name to FDJ United in March 2025. FDJ United was founded in 1933 and is headquartered in Boulogne-Billancourt, France.
How the Company Makes MoneyFDJU generates revenue primarily through the sale of lottery tickets and sports betting wagers. Its key revenue streams include traditional lottery games, instant win scratch cards, and online gaming services. The company also benefits from partnerships with various retail outlets, where lottery tickets and betting products are sold. Additionally, FDJU earns income from digital channels, enhancing its reach to customers through mobile and online platforms. Furthermore, the company has strategic collaborations with sports organizations and event sponsors, which help boost its visibility and attract more players to its offerings.
La Francaise des Jeux SA Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Neutral
The call presents a mixed but resilient picture. Highlights include record free cash flow, strong LSF performance, completion of the Kindred integration, accelerated operational efficiencies (performance plan upgraded to €150m), and a proposed dividend increase — all signals of financial strength and execution. Offsetting these positives are material tax and regulatory headwinds (notably in the Netherlands and new UK taxation), an underperforming OBG BU with a sharp margin decline, sizeable nonrecurring impairments and higher short-term IT costs tied to platform migrations. Management’s actions (performance plan, tech roadmap, brand consolidation and responsible-gaming investments) and strong cash generation mitigate many risks, but the near-term outlook remains challenged by taxes and regulatory uncertainty.Q4-2025 Updates
Positive Updates
Strong overall financial and cash generation
Group GGR c.€8.7bn, revenue c.€3.7bn and recurring EBITDA €902m (margin 24.5%). Record free cash flow €782m, +16% YoY, with recurring EBITDA-to-cash conversion at 87% (above the >80% guidance). Net financial debt €1.7bn (down ~€100m) and leverage ~1.9x.
Robust LSF (France lottery & retail sports betting) performance
LSF GGR +3% to €6.9bn and revenue +1% to €2.5bn (includes >€28m French tax impact). Underlying lottery growth: GGR +3%, revenue +2% (>€2bn). LSF current EBITDA €913m, +3% YoY, margin 36% (+60 bps). Online lottery revenue +8%; online now >15% of lottery; player base >6 million (record recruitment).
Successful integration and operational improvements in OBG
Kindred integration completed; deployment of 32Red and Unibet on proprietary platforms in the UK. Marketing automation ramped-up (70%+ of direct marketing campaigns automated in most markets). Customer service optimization handled ~20% more interactions while reducing costs >10% in 2025.
Performance plan outperformance and scope increased
2025 performance plan savings ~€50m (vs initial €20m target). Group raised multi-year target from €120m to €150m of recurring cost efficiencies by end-2028. Additional €100m cumulative benefit expected by 2026 (including the €50m already realized). Total costs down ~2% (~€50m) despite modest GGR growth.
Dividend policy and shareholder returns
Board proposes raising dividend to €2.10 per share, maintaining stated payout policy (payout referenced ~75–80% of adjusted net income). Adjusted net income stable at €487m (vs €490m prior year).
Improvements in international lottery & portfolio optimization
International lottery EBITDA improved to €38m (up €13m), with margin rising to 22.5% from 13.1% (benefit from sale of Sporting Group and portfolio pruning). Payment & Services refocused on profitable offerings and Nirio investment for future growth.
Continued investment in technology, AI and ESG
CapEx €172m in 2025 (majority in IT). Investments in AI-driven marketing, customer operations and Responsible Gaming tools (FDJ Protect, Crucial Compliance). ESG: social & economic contribution >€7bn in France; public levies >€4.8bn; >57,000 jobs supported; €1bn+ paid to 29,000 retailers; A+/A carbon rating and €5m invested in restoration fund.
Negative Updates
Significant tax and regulatory headwinds
Cumulative gaming tax increases (France, Netherlands, Romania, Sweden, others) reduced net gaming revenue by ~3% in 2025 and had >€50m negative impact on revenue and EBITDA in FY25. Management cites a 2026 incremental calendar effect: ~€140m impact on NGR vs 2024 and >€150m impact on EBITDA when including advertising tax. UK tax alone ~€30m in 2026 (rising to >€40m in 2027). Average tax on GGR ~59.9% (vs 58.5% in 2024).
OBG activity decline and margin compression
OBG GGR declined 8% in 2025; revenue down 12% to €908m (c.€23m of cumulative taxes cited). OBG current EBITDA €181m, margin 20% vs 28.5% in 2024. High fixed-cost base (~2/3 fixed) created significant negative operating leverage when activity slowed.
Net income hit by impairments and nonrecurring items
Reported net income fell to €176m (from €399m prior). Nonrecurring items €199m (incl. €166m PPA impairments and €28m restructuring). Gross PPA amortization ~€200m (net ~€170m). These noncash items materially reduced reported earnings.
Regulatory disruption in the Netherlands
Management describes rapid, ill-considered regulatory decisions driving legal market shrinkage by ~25%, boosting offshore activity and causing loss of taxed, regulated volume—negative for operators and public protection of players.
Short-term cost pressure from IT and platform migrations
IT services rose (group +4%; OBG IT +17%) driven by platform migrations and proprietary platform investments. Elevated CapEx and IT spend increase fixed costs in the near term, contributing to margin pressure until migrations complete.
Lower recurring EBITDA vs restated prior year
Group recurring EBITDA €902m, down ~6% vs 2024 restated (impact largely from tax increases and weaker activity in key OBG markets). This contributed to slightly lower-than-expected debt reduction vs initial targets.
Company Guidance
FDJ United’s 2026 guidance targets GGR growth (stronger in H2) with OBG expected to drive higher GGR growth than LSF though revenue growth should be broadly comparable given new taxes, and management is targeting stability in recurring EBITDA margin versus 2025 (group 24.5%; LSF 36%; OBG 20%) while continuing the performance plan (€50m delivered in 2025, ~€50m incremental in 2026 for a ~€100m cumulative effect in 2026 and a raised target of €150m of recurrent efficiencies by end‑2028). Model assumptions include cumulative 2026 tax/calendar effects of ~€140m on NGR (>€150m EBITDA impact including ad tax), a UK tax hit of ~€30m in 2026 (rising to >€40m in 2027), Romanian annualization of ~€8m, PPA amortization ~€200m gross (~€170m net), CapEx ~€160m (c.4–5% of revenue), adjusted net income c.€487m, free cash‑flow conversion >80% (2025 was 87% with FCF €782m), net debt reduction of ~€100m (net debt/recurring EBITDA ~1.9x), and a proposed dividend of €2.10 per share with a commitment to annual increases and a payout policy above ~75% of adjusted net income.La Francaise des Jeux SA Financial Statement Overview
Summary
Steady revenue growth and healthy operating cash flow are offset by a sharp 2025 net income drop (despite higher EBIT/EBITDA) and a notable leverage increase since 2024 (debt ~2.0x equity with weaker equity), reducing earnings quality and balance-sheet flexibility. Free cash flow also trended down in 2024–2025 despite improved operating cash flow.Income Statement
Revenue has grown consistently from 2021–2025, with growth moderating to ~5% in 2025 after a strong 2024. Profitability is the key swing factor: net income fell sharply in 2025 (down materially versus 2024) even though EBIT and EBITDA were higher, pointing to heavier below-the-line costs (e.g., taxes, interest, or non-operating items). Margin history (2020–2024) is solid for the industry, but the 2025 earnings step-down reduces confidence in near-term earnings quality.62
Positive
Balance Sheet
Leverage increased significantly: total debt jumped from ~0.4–0.8x equity (2020–2023) to roughly ~2.0x equity in 2024 and remained elevated in 2025, while equity also declined from 2024 to 2025. Total assets decreased in 2025 as well. The business still shows the ability to generate operating profits, but the higher debt load and weaker equity cushion raise financial risk and reduce balance-sheet flexibility.45
Neutral
Cash Flow
Operating cash flow is healthy and improved in 2025, supporting ongoing cash generation. However, free cash flow declined in both 2024 and 2025, including a notable ~24% drop in 2025, suggesting higher capex, working-capital drag, or other cash uses. In prior years where data is available (2022–2024), free cash flow covered a meaningful portion of earnings, but the recent free-cash-flow downtrend is a watch item.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.68B | 3.07B | 2.62B | 2.46B | 2.26B |
| Gross Profit | 1.21B | 1.70B | 1.23B | 1.04B | 934.80M |
| EBITDA | 902.00M | 802.50M | 703.70M | 590.20M | 547.50M |
| Net Income | 175.90M | 398.80M | 425.10M | 307.90M | 294.20M |
Balance Sheet | |||||
| Total Assets | 5.84B | 6.56B | 3.76B | 3.34B | 3.21B |
| Cash, Cash Equivalents and Short-Term Investments | 794.10M | 843.20M | 749.70M | 720.40M | 688.40M |
| Total Debt | 2.37B | 2.33B | 428.80M | 468.20M | 518.90M |
| Total Liabilities | 4.86B | 5.37B | 2.69B | 2.41B | 2.38B |
| Stockholders Equity | 974.80M | 1.19B | 1.07B | 925.40M | 829.10M |
Cash Flow | |||||
| Free Cash Flow | 496.10M | 427.10M | 504.20M | 299.70M | 522.00M |
| Operating Cash Flow | 765.40M | 577.00M | 628.90M | 403.80M | 597.50M |
| Investing Cash Flow | -278.50M | -1.76B | -21.70M | -181.70M | -301.50M |
| Financing Cash Flow | -523.80M | 1.33B | -580.50M | -315.20M | -366.80M |
La Francaise des Jeux SA Technical Analysis
Positive
22.94
Price Trends
23.37
Positive
24.01
Positive
26.95
Negative
Market Momentum
0.75
Negative
69.83
Neutral
87.97
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:FDJU, the sentiment is Positive. The current price of 22.94 is below the 20-day moving average (MA) of 23.91, below the 50-day MA of 23.37, and below the 200-day MA of 26.95, indicating a neutral trend. The MACD of 0.75 indicates Negative momentum. The RSI at 69.83 is Neutral, neither overbought nor oversold. The STOCH value of 87.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:FDJU.
La Francaise des Jeux SA Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | €4.00B | 5.50 | ― | 1.67% | 8.20% | 4.81% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | €171.61M | 3.51 | 2.48% | 1.78% | 4.23% | 17.85% | |
60 Neutral | €1.91B | 40.85 | -5.53% | 0.31% | 39.72% | 63.70% | |
56 Neutral | €4.67B | 24.86 | ― | 8.77% | 26.91% | -28.35% | |
46 Neutral | €2.26B | 29.84 | ― | 7.54% | -3.17% | -37.20% |
* Consumer Cyclical Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.