{"id":11727,"date":"2025-12-09T11:36:28","date_gmt":"2025-12-09T11:36:28","guid":{"rendered":"https:\/\/sbceurasia.com\/en\/?p=11727"},"modified":"2025-12-09T11:37:16","modified_gmt":"2025-12-09T11:37:16","slug":"morningstar-aristocrat-shares-are-undervalued-and-have-long-term-growth-potential","status":"publish","type":"post","link":"https:\/\/sbceurasia.com\/en\/2025\/12\/09\/morningstar-aristocrat-shares-are-undervalued-and-have-long-term-growth-potential\/","title":{"rendered":"Morningstar: Aristocrat Shares are Undervalued and\u00a0Have Long-Term Growth Potential"},"content":{"rendered":"\n

According to analysts at Morningstar<\/strong>, shares of Australia\u2019s Aristocrat Leisure Limited <\/strong>remain undervalued. Investors are too focused on temporary weakness in the land-based gaming equipment segment and are failing to account for the company\u2019s long-term reinvestment potential.<\/p>\n\n\n\n

Aristocrat was among the few ASX-listed<\/strong> companies highlighted by Morningstar market strategist Lochlan Halloway<\/strong> in his Friday research note, in which he examined the concept of a \u201creinvestment runway\u201d – an idea that reflects the durability of competitive advantages and the breadth of opportunities for value-accretive investment. While some companies eventually exhaust their expansion opportunities, those with a long reinvestment runway can maximize their competitive edge and avoid the risk of being forced into inefficient, value-destructive investments in an attempt to revive growth.<\/p>\n\n\n\n

According to Halloway, the market often misprices such opportunities – creating an opening for investors capable of identifying \u201cmoated\u201d companies with long-term growth potential and high rates of return on invested capital. Aristocrat currently maintains around 27%<\/strong> of new electronic gaming machine shipments<\/strong> in North America – the largest EGM market in the world. For comparison, it held 23% in 2019 and just 13% in 2012<\/strong>. This increase in market share, the analyst notes, has been made possible by continuous investment in R&D: around 12% of revenue<\/strong> is allocated to developing new games, cabinets, and content – significantly higher than the spending levels of competitors.<\/p>\n\n\n\n

These expenditures, however, are justified: Aristocrat\u2019s average return on invested capital was 17% over the past five years and 24% over the past decade<\/strong> – well above the company\u2019s cost of capital.<\/p>\n\n\n\n

\u201cTwo-thirds of earnings are retained and the reinvestment flywheel should continue to drive market share gains in land-based gaming,\u201d Halloway wrote.<\/p>\n\n\n\n

\u201cOnline casino is a big potential growth avenue, though it\u2019s too soon to say whether the economics will match land-based gaming. Nonetheless, Aristocrat\u2019s library of proven game concepts, refined over decades on casino floors, should provide an edge over pure-play online operators.<\/p>\n\n\n\n

\u201cToday, the market seems caught up on temporary softness in Aristocrat\u2019s gaming operations, undervaluing its long reinvestment runway in land gaming, and the growth option in online casino.\u201d<\/p>\n\n\n\n

Morningstar is a pioneer of the \u201ceconomic moat rating\u201d, which it applies as a way of evaluating how durable and defensible a company\u2019s competitive advantages are. The rating insinuating that \u2013 much like a medieval castle \u2013 a wide moat makes it harder for competitors to attack or erode its profits.<\/p>\n\n\n\n

Don\u2019t forget to subscribe to our Telegram channel<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"

According to analysts at Morningstar, shares of Australia\u2019s Aristocrat Leisure Limited remain undervalued. Investors are too focused on temporary weakness in the land-based gaming equipment segment and are failing to account for the company\u2019s long-term reinvestment potential. Aristocrat was among the few ASX-listed companies highlighted by Morningstar market strategist Lochlan Halloway in his Friday research […]<\/p>\n","protected":false},"author":7,"featured_media":8575,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[5,1],"tags":[11612,8611,14906,14905],"class_list":["post-11727","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gambling","category-news","tag-aristocrat-leisure-limited","tag-asx","tag-lochlan-halloway","tag-morningstar"],"yoast_head":"\nMorningstar: Aristocrat Shares are Undervalued and\u00a0Have Long-Term Growth Potential - SBC EURASIA EN<\/title>\n<meta name=\"description\" content=\"According to analysts at Morningstar, shares of Australia\u2019s Aristocrat Leisure Limited remain undervalued.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sbceurasia.com\/en\/2025\/12\/09\/morningstar-aristocrat-shares-are-undervalued-and-have-long-term-growth-potential\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Morningstar: Aristocrat Shares are Undervalued and\u00a0Have Long-Term Growth Potential - 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