Aristocrat Leisure Limited (ALL) is a leading global gaming content and technology company and top-tier mobile games publisher, with more than 7,500 employees in over 20 locations around the world. Aristocrat offers a diverse range of products and services including electronic gaming machines, casino management systems and free-to-play mobile games. The company’s regulated gaming products are approved for use in more than 300 licensed jurisdictions and are available in more than 100 countries. Aristocrat shares are trading at a slight discount to our unchanged $43 fair value estimate, after recovering strongly from lows of near $30 at the beginning of 2023.
We think the market is now appropriately balancing the firm’s dominance in land-based gaming against slowing tailwinds in Aristocrat’s digital businesses. We estimate Aristocrat’s highly popular and profitable gaming machine titles will allow the firm to continue to capture share in both outright sales and leased machines in the key North American market. Aristocrat is the dominant player in a consolidated market. We estimate the three major players—Aristocrat Leisure, Light & Wonder, and International Game Technology—together command the vast majority of North American outright sales and a similar proportion of leased machines. The majors compete fiercely with each other, and the durability of the remaining minority share indicates smaller manufacturers are still able to carve niches, at least for a while, despite considerably lower research and development expenditures. We don’t expect the competitive environment to ease. R&D investment can be leveraged to drive game performance across all business units. R&D is the lifeblood of any electronic gaming manufacturer, especially given a trend to more rapidly changing technology.