S&P Upgrades Aristocrat Leisure to 'BBB' on Strong Growth

S&P Raises Aristocrat Leisure Rating to 'BBB'

S&P Global Ratings has upgraded Aristocrat Leisure Ltd. to a 'BBB' credit rating, citing the company's robust operating performance, growing revenue diversity, and strong free cash flow generation. The outlook is stable, reflecting expectations of sustained financial strength and market leadership.

Performance Overview

The upgrade acknowledges Aristocrat's dominant market position in land-based gaming, with notable market share gains in North America and Australia. A high degree of recurring revenue, which constitutes 72% of the total, provides significant cash flow stability. The recent acquisition of NeoGames further strengthens its position in the iLottery market.

Economic and Market Impact

S&P projects Aristocrat will generate at least A$1.5 billion in free operating cash flow annually from fiscal 2026. This financial flexibility supports its A$1.5 billion share buyback program and maintains a low net debt to EBITDA ratio of 0.2x, well below its target range and S&P's downside threshold.

Summary

The 'BBB' rating affirms Aristocrat's solid financial health and market leadership. Future growth is expected from its Interactive segment, which leverages existing intellectual property for new online gaming content, positioning the company for continued success.

FAQ

Q: Why was Aristocrat Leisure's rating upgraded?
A: The upgrade to 'BBB' was driven by strong operating performance, high recurring revenue, robust free cash flow, and a dominant market position in gaming.

Q: What is the financial outlook for Aristocrat?
A: The outlook is stable, with S&P forecasting continued earnings growth and annual free cash flow exceeding A$1.5 billion from fiscal 2026.

Source: Investing.com