Published on: October 7, 2024, 05:02h.
Last updated on: October 7, 2024, 05:02h.
Flutter Entertainment’s (NYSE: FLUT) recent announcement to repurchase up to $5 billion of its shares over the next few years is not expected to impact its credit rating, according to Moody’s Investors Service.
Moody’s states that Flutter’s commitment to maintaining a medium-term leverage ratio target of 2.0x-2.5x, equivalent to a Moody’s-adjusted gross leverage ratio range of roughly 3.0x-3.5x, supports its assessment of the company’s credit quality.
Moody’s further notes that Flutter has the flexibility to exceed its leverage target if it identifies growth opportunities that would bring leverage back to the desired range.
Flutter Has Flexibility with Buyback Plan
Flutter’s $5 billion share repurchase program offers significant flexibility and is not a mandatory obligation for the company. This initiative reflects Flutter’s confidence in its business, particularly its position in the US online sports betting market and iGaming sector.
While the return of capital to shareholders indicates long-term confidence, Moody’s expects that Flutter will repurchase shares using cash on hand, generated free cash flow, and debt, while adhering to its current credit rating guidelines.
Flutter remains optimistic about the growth of the US and global gaming markets, projecting revenue of $21 billion by 2027 and free cash flow generation of $2.5 billion, supporting the buyback plan and potential additional shareholder rewards.
Moody’s concluded that the size of the buyback program reflects Flutter’s confidence in its long-term growth forecasts and financial policy announced in March 2024.