Inspired Entertainment (INSE) AI Stock Analysis

• Market Cap: $195.87M
• Dividend Yield: N/A
• Average Volume (3M): 154.83K
• Price to Earnings (P/E): 3.1
• Beta (1Y): 1.26
• Revenue Growth: -7.53%
• EPS Growth: 661.35%
• Country: US
• Employees: 1,420
• Sector: Consumer Cyclical
• Sector Strength: 64
• Industry: Gambling, Resorts & Casinos
• EPS (TTM): 2.31
• Shares Outstanding: 26,904,833
• 10 Day Avg. Volume: 171,748
• 30 Day Avg. Volume: 154,826
• PEG Ratio: 0.00475
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.79
• Price to Cash Flow (P/CF): 2.20
• P/FCF Ratio: 3.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $13.50
• Price Target Upside: 85.44% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

Inspired Entertainment presents a mixed outlook. Strengths include strong growth in Interactive and gaming segments, reflected in the earnings call. However, significant leverage and technical indicators suggest caution. The stock's low P/E ratio indicates potential undervaluation, balancing the leverage concerns.

Positive Factors

Earnings Beat

Inspired Entertainment reported 3Q24 EBITDA of $30M, beating consensus expectations by 3%.

Interactive Division Growth

Interactive division increased EBITDA by 47% and beat consensus by 13%.

Strategic Partnerships

The hybrid dealer product continued to make progress with a strategic partnership with FanDuel, one of the largest gaming operators in the United States.

Negative Factors

Gaming Segment Decline

Gaming 2Q revenues and EBITDA declined by 13% and 12% year-over-year.

Valuation Concerns

Shares of INSE are currently trading sub-5x EV/EBITDA, below peers, recent supplier M&A transactions, and its historic levels.

Virtual Sports Challenges

Virtual Sports continues to face headwinds resulting in EBITDA being 16% below consensus.

Inspired Entertainment Business Overview & Revenue Model

Company Description

Inspired Entertainment, Inc., a business-to-business gaming technology company, supplies content, platform, and other products and services to regulated lottery, betting, and gaming operators worldwide. The company operates through four segments: Gaming, Virtual Sports, Interactive, and Leisure. The Gaming segment supplies gaming terminals and software to betting offices, casinos, gaming halls, and high street adult gaming centers; a portfolio of games through its digital terminals under the Centurion and Super Hot Fruits names; and traditional casino games, such as roulette, blackjack, and number games. The Virtual Sports segment designs, develops, markets, and distributes ultra-high-definition sports games that include greyhounds, tennis, motor racing, cycling, cricket, speedway, golf, and dart, and other horse racing games under the V-Play Soccer, V-Play Football, V-Play Basketball, Virtual Grand National, and V-Play NFLA names. The Interactive segment provides a range of premium random number generated casino content from feature-rich bonus games to European-style casino free spins and table games. The Leisure segment supplies gaming terminals and amusement machines in pubs, bingo halls, and adult gaming centers, as well as family entertainment centers, bowling centers, and other entertainment venues. Inspired Entertainment, Inc. is headquartered in New York, New York.

How the Company Makes Money

Inspired Entertainment generates revenue through several key streams. The company earns money by supplying its virtual sports and gaming content to both land-based and online operators, who pay licensing and service fees to access these products. Additionally, Inspired Entertainment sells and leases electronic gaming machines to retail gaming venues, deriving income from both direct sales and ongoing maintenance agreements. The company also benefits from revenue-sharing arrangements with its clients, where a portion of the gaming revenue generated through their products is shared with Inspired. Significant partnerships with major gaming operators and continued expansion into new markets further contribute to the company's financial performance.

Inspired Entertainment Financial Statement Overview

Summary

Inspired Entertainment shows growth in revenue and net income, but high leverage and negative equity on the balance sheet are concerning. Improvements in cash flow are promising but require careful management due to past volatility.

Income Statement

Inspired Entertainment shows a strong recovery in net income and revenue growth over the years. The gross profit margin remains impressive, with a significant increase in net profit margin from prior years. However, the EBIT and EBITDA margins have shown some volatility, indicating room for improvement in operational efficiency.

Balance Sheet

The company has a high debt-to-equity ratio due to negative stockholders' equity, indicating significant leverage risk. The equity ratio is also negative, highlighting potential financial instability. While asset growth is noted, the heavy reliance on debt poses a risk to financial health.

Cash Flow

Cash flow analysis reveals a positive trend in operating cash flow and recent improvements in free cash flow. The free cash flow to net income ratio is promising, yet the company's historical volatility in free cash flow suggests potential liquidity concerns.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
297.10M	323.00M	285.40M	208.90M	199.80M
	Gross Profit
275.10M	155.40M	213.40M	158.20M	155.30M
	EBIT
31.70M	39.90M	48.90M	3.70M	8.80M
	EBITDA
55.10M	84.00M	90.70M	53.90M	53.00M
	Net Income Common Stockholders
65.80M	7.60M	20.60M	-36.70M	-29.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
29.30M	40.00M	25.00M	47.80M	47.10M
	Total Assets
438.40M	340.90M	309.40M	331.70M	324.10M
	Total Debt
350.80M	331.50M	288.50M	322.50M	311.10M
	Net Debt
321.50M	291.50M	263.50M	274.70M	264.00M
	Total Liabilities
441.70M	418.90M	367.10M	409.70M	412.80M
	Stockholders Equity
-3.30M	-78.00M	-57.70M	-78.00M	-88.70M
Cash Flow		Free Cash Flow
15.60M	-2.30M	-5.00M	-19.20M	23.00M
	Operating Cash Flow
32.50M	45.50M	34.80M	6.20M	52.90M
	Investing Cash Flow
-40.90M	-48.40M	-40.40M	-37.90M	-29.90M
	Financing Cash Flow
-1.60M	16.20M	-11.10M	31.20M	-8.20M

Inspired Entertainment Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 7.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INSE, the sentiment is Negative. The current price of 7.28 is below the 20-day moving average (MA) of 8.30, below the 50-day MA of 9.38, and below the 200-day MA of 9.23, indicating a bearish trend. The MACD of -0.31 indicates Positive momentum. The RSI at 38.97 is Neutral, neither overbought nor oversold. The STOCH value of 26.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INSE.

Inspired Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BYD	78 Outperform	$5.33B	10.43	34.76%	1.07%	5.13%	2.04%
IGT	74 Outperform	$3.16B	9.17	8.08%	5.11%	-22.16%	123.24%
INSE	63 Neutral	$195.87M	3.14	-12.77%	―	-7.53%	661.35%
EVRI	62 Neutral	$1.18B	80.23	6.23%	―	-6.97%	-81.42%
Sector *	59 Neutral	$11.48B	10.33	-0.84%	4.02%	1.25%	-16.06%
CZR	46 Neutral	$5.37B	―	-6.38%	―	-2.45%	-135.17%

Inspired Entertainment Corporate Events

Inspired Entertainment Extends Leadership Employment Terms

On January 29, 2025, Inspired Entertainment announced extensions to the employment terms for Executive Chairman A. Lorne Weil and CEO Brooks H. Pierce, effective January 1, 2025. These extensions include increased base salaries and target bonus opportunities, with Weil’s term extended to December 31, 2028, and Pierce’s to December 31, 2027, reflecting the company’s commitment to retain its leadership team.