Playtika Holding Corp (PLTK): A Deep Dive into Its Performance Potential
Long-established in the Interactive Media industry, Playtika Holding Corp (NASDAQ:PLTK) has enjoyed a stellar reputation. It has recently witnessed a surge of 6.5%, juxtaposed with a three-month change of -11.37%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Playtika Holding Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
1. Financial strength rank: 4/10
2. Profitability rank: 8/10
3. Growth rank: 8/10
4. GF Value rank: 8/10
5. Momentum rank: 0/10
Based on the above method, GuruFocus assigned Playtika Holding Corp the GF Score of 67 out of 100, which signals poor future outperformance potential.
Playtika Holding Corp: A Snapshot
Playtika Holding Corp, with a market cap of $3.66 billion, is primarily engaged in developing mobile games. Some of its games include Board Kings, House of Fun, Poker Heat, Slotomania, and Bingo Blitz. The company has built live game operations services and a proprietary technology platform to support its portfolio of games. It primarily derives revenue from the sale of virtual items associated with online games. Geographically, the group has a business presence in the USA, EMEA, APAC and Other regions of which key revenue is derived from the USA. It offers both Mobile and Web-based platforms.
Financial Strength Breakdown
Playtika Holding Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 3.91, which positions it worse than 89.7% of 330 companies in the Interactive Media industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 2.09, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81.
Additionally, the company's low cash-to-debt ratio at 0.38 indicates a struggle in handling existing debt levels.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Playtika Holding Corp has shown some promising signs, its financial health and growth potential raise concerns about its ability to outperform in the future. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
