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Investment Q&A

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Q: In the conference call the guidance discussed was $2.13-2.68 (although someonelse suggested $2.16-2.71). The analyst estimate from your website shows $2.88 for 2018 and an estimate of $3.24 90 days ago. This seems to be a considerable downward trend although management seemed quite upbeat and insisted there are no structural changes to account for the weakness. Given this context I have two questions. Are there other metrics to suggest management is executing well? Are you comfortable with the potential such that you would take a new position at this price or would you wait for next quarter?
Mike
Read Answer Asked by michael on November 08, 2018
Q: Hello, do you still consider TOY a good stock for future growth? With revenue growth slowing last quarter to 12.6 % ( vs 37.4 % Aug 2017) and further declining to 2.3% this quarter (vs 27.6 % Nov 2017) and outlook of mid-single digit Gross Product Sales growth for full year 2018.
Does that not seem to be an extremely low revenue growth outlook for a stock like this? I understand the Toys "R" Us issues are a big driver of this low revenue growth but do you have confidence they can return to 20 % plus growth ? I know I am focusing on revenue growth but it seems so low... maybe they have a more positive view for 2019, did you gain any further insights from the conference call?
Read Answer Asked by Michael on November 08, 2018
Q: The share prices of both TSGI and NFI have recorded significant declines recently. However, I feel the growth prospects for both companies are solid and, as such, consider this to be a good buying opportunity for a 3-5 year hold. Do you agree and, if so, would you ease in with 1/2 positions at this time or take full positions and simply put them away for a few years?
Read Answer Asked by Richard on November 08, 2018
Q: SPB's Q3 looks good in terms of trending upwards in most respects. However, the market measures a stock's results based on expectations, In that case did the results meet those expectations for Q3 and the future? Also, is there any chance SPB will increase its dividends? It has been stuck at $0.06 a month for years. Thank you.
Read Answer Asked by Victor on November 08, 2018
Q: Did TSG screw up with their purchase of Sky Betting?

I ask because I wonder if the money would have been better spent partnering with major North American Sport Leagues instead? I can see a future (I hear this is the case with European football) where watching sports becomes more interactive with in-game betting or fantasy sports that is integrated and live as I watch. This could be through an enhanced subscription. How awesome would it be from my television remote to bet how many home runs will be scored in a game, inning, player, etc? With other gaming companies signing exclusive agreements I'm sure such scenarios will be channeled through their gaming products as opposed to The Stars Group.
Read Answer Asked by Gooding on November 08, 2018
Q: What were the main factors that drove TSGI's stock price from April to its high in June? And what has now been the main reason for its decline? Has anything fundamentally changed? I see that Poker, its largest revenue source actually declined in comparison to Q3 2017. Is this a big concern, or is most of it's expected growth to come from gaming/betting? Is there hope that when/if most States legalize online gambling that TSGI will earn more much revenue from this?
Read Answer Asked by Michael on November 08, 2018
Q: Your thoughts on GSY recent quarter? This seems to be an extremely well run company...
• 34th consecutive quarter of same store sales growth
• 69th consecutive quarters of positive net income
• Compound annual growth in diluted earnings per share of 37.0% since 2001

Looking at the outlook for 2019 and 2020, revenue growth drops from (26% - 28%) in 2018, to (20% - 22%) in 2019 and (14 - 16%) in 2022 (they do note ROE will increase each year). Is this a concern? or is it just the reality of a company getting older or are they just being conservative. Last years Q3 2017 outlook was (16% ‐ 18% for 2018) (14% ‐ 16% in 2019) and (10% ‐ 12% in 2020) so they certainly beat 2018 expectations and have increased 2019 and 2020 since last years outlook.
Read Answer Asked by Michael on November 08, 2018
Q: Hi,

I am observing SYZ break out nicely this week. (and btw- thanks to 5i for its coverage of this company). I am curious if you would want to comment on the company at this time. I assume you would maintain at least a B- rating. The trading volume remains low, but perhaps it is becoming a bit more visible and may attract analyst coverage. Thanks for your opinion. Jim,
Read Answer Asked by Jim on November 07, 2018
Q: This morning you noted that TSGI had paid $300 m against debt. I am wondering how you calculated this. I see on the news release that they paid off the $100m on the credit line (after quarter end) and long term debt stands at $5.65B but I don't see mention of $300m? Are they making these payments because they are cash rich or because of some statutory requirement under the lending agreement?

Thanks
Mike
Read Answer Asked by michael on November 07, 2018
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