The folks over at Paddy Power have a problem most businesses would kill to have…too much cash.
Even better, for Paddy Power shareholders, the company will be handing back that pile of cash to their lucky shareholders over the next few years.
According to published reports, the UK’s largest independent bookmaker is sitting on a cash surplus that could be somewhere in the neighborhood of €800 million ($871 million USD) when the payout is finished.
For now, Paddy Power shareholders will divvy up an estimated €392 million ($426 million USD) that’s the result of the company’s blockbuster 2014 earnings.
Last year the company saw revenue shoot up across its worldwide sports betting properties. Huge success in Australia, to cite one of many examples, boosted Paddy Power’s revenues that year to €882 million ($960 million USD). That’s a whopping 18% increase over the previous year.
News of Paddy Power’s cash “problem” sent ripples across the financial industry and had analysts swooning over the company’s success. The Davy Group, an Ireland-based stock brokerage, upgraded the company’s stock status from, neutral to outperform as a result.
A Davy’s representative told CalvinAyre.com that Paddy Power’s success should continue for the foreseeable future saying:
Based on our forecasts, should Paddy Power raise debt at the end of 2016, to correspond to its new target gearing level, we estimate that it could return nearly €800m over two years, between ordinary and special dividends. That equates to 21% of its current market capitalization.
Paddy Power has built its success on innovative, and controversial, marketing techniques that have endeared the company to its customers and, clearly, is paying off in a major way.