On Friday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Rank Group PLC (LON:RNK:LN) shares, a British gambling company, by increasing the price target to £1.20 from the previous £1.10. The firm continues to support the stock with a Buy rating.
This decision comes after Rank Group disclosed a notable 9% like-for-like (LFL) net revenue growth, reaching £737.4 million, which slightly surpassed Deutsche Bank's estimate of an 8% increase.
The reported revenue surge has been attributed to a significant improvement in the company's earnings before interest and taxes (EBIT), which more than doubled to £46.5 million, marginally exceeding Deutsche Bank's projection of £46.0 million.
The growth in EBIT is largely due to the company's high operating leverage. The final quarter of the fiscal year particularly stood out, with LFL net gaming revenue (NGR) climbing by 14% year-over-year.
Additionally, Rank Group has reinstated dividend payments, which came as a positive surprise against forecasts. The Board has recommended a dividend of 0.85 pence per share and has also indicated plans to declare an interim dividend during the half-year results announcement in January 2025.
Based on the proposed dividend distribution structure, which is expected to follow a one-third interim and two-thirds final dividend split, the anticipated dividend yield stands at approximately 1.8%, correlating to a payout of around 20%.
The resumption of dividend payments marks a significant milestone for Rank Group, reflecting the company's confidence in its financial health and commitment to providing shareholder value.
The financial performance and the reinstatement of dividends underscore the company's recovery trajectory and operational strength in a competitive industry.
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