Following up on my previous post. I wanted to do a complete analysis of the worst performance of my algorithm since March: FDJ ($FDJ (+0.93%) ).
As I mentioned, the share price has plunged 28% since I flagged it as a "high opportunity". FDJ has a state lottery monopoly in France ironclad until 2044. So why has it fallen so much?
I consulted my platform's mathematical model diagnostic and it isolated exactly the noise that scares the market:
📉 New taxes: New taxes on gambling in France along with a 15% tax on advertising (an estimated €90M hit to recurring EBITDA).
📉 Integration costs: The macro purchase of Unibet (Kindred Group) for €2,500M has put heavy pressure on profit margins in the short term.
📉 Regulatory uncertainty: Consumer lawsuits in the Netherlands for €75M and a tightening of gambling regulation at European level.
The market hates uncertainty and has wrecked the share price.
But here comes the twist. The system puts sentiment aside. After analyzing the drop, the algorithm rates FDJ as 🟢. OPTIMAL in this week's update.
Why? Because underneath all this temporary noise, the money-making machine is still running:
✅ Immense revenues: Right now it offers a brutal 9.1% RPD (Yield).
✅ Debt under control: Despite the huge Kindred buyout, the Net Debt/EBITDA ratio is super healthy (only 1.74x).
✅ Cheap Valuation: The current P/E is scary (23.9x) due to the very high extraordinary integration costs. But the forward P/E (forward) P/E is just 9.3x.
The algorithm does not prevent short-term volatility. It identifies fundamental value mismatches. My main thesis (buying a highly profitable state-owned monopoly on rebates) is still absolutely intact. And at this point, the margin of safety is much higher.
