£989.4m market cap
1545p last close
Keywords Studios is now the largest and most diverse supplier of outsourced services to the games industry. Through regular acquisitions, the company is building its scale, geographic footprint and delivery capability.
Investment summary
Keywords Studios looks structurally well placed to continue performing well in an industry where change and innovation are the norm. Looking ahead, we see sustained growth from the launch of streaming services by industry majors and the continued shift towards outsourcing. Keywords showed the resilience of its model in FY18, delivering 10.1% l-f-l revenue growth and 53% adjusted EPS growth as well as a five-year EPS CAGR of 53%. As such, we believe that the shares remain set for continued appreciation.
Y/E Dec |
Revenue (€m) |
EBITDA (€m) |
PBT (€m) |
EPS (c) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2017A | 151.4 | 26.6 | 23.1 | 30.0 | 59.9 | 49.3 |
| 2018A | 250.8 | 44.2 | 37.9 | 45.8 | 39.2 | 30.0 |
| 2019E | 298.9 | 51.3 | 44.1 | 54.3 | 33.1 | 34.7 |
| 2020E | 334.7 | 57.3 | 49.4 | 60.9 | 29.5 | 32.3 |
| Last updated on 25/04/2019 | ||||||
Industry outlook
Despite a period of weakness in the games industry in H218, including the sell-off in the shares of a number of market-leading companies, we believe that the dynamics of the industry remain attractive and that recent downgrades/share price weakness have been a reflection of expectations getting ahead of themselves. The sustained trend towards outsourcing should support a low mid-teens growth rate for service providers, supported by M&A in what remains a fragmented industry.
Last updated on 25/04/2019
Sector |
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| TMT |
Share price graph
Balance sheet |
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|---|---|
| Forecast net debt (€m) | 5.6 |
| Forecast gearing ratio (%) | 2 |
Price performance
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1m |
3m |
12m |
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Key management |
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|---|---|
| Ross Graham | Chairman |
| Andrew Day | CEO |
| David Broderick | FD |
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