Paddy's off to the races
Sunday July 27 2008
QUOTED bookmaker Paddy Power will be hoping for bumper Galway Races starting tomorrow.
With the share price down by almost a tenner since last October, Patrick Kennedy's company is almost certainly oversold.
The urge to wager our money is remarkably strong in most of us. The punters' fantasy of easy money has made bookmakers rich in good times and bad.
Last October, the Paddy Power share price peaked at €28.40, valuing the entire company at almost €1.4bn. Since then the share price has dropped to €18.60 cutting its market capitalisation to just over €900m.
At its peak the Paddy Power share price was trading at the equivalent of almost 23 times after-tax profits. Even with a strong growth record that was way too high. Since then the share price has dropped by almost 35 per cent.
It is now on just over 12 times likely 2008 after-tax profits. I can't help feeling that the shares are oversold. Anyone thinking of betting with Paddy Power in Galway should think about buying the shares instead.
