Brightstar Lottery PLC

AI-generated fair value estimate for this company.

Method: Two-stage levered free-cash-flow-to-equity DCF. Base: normalized FCF of $300M for 2027 (FY2026 guided revenue $2.50-2.55B, adj. EBITDA $1.16-1.19B, capex $450-475M, excluding the one-off EUR1.43B Italy Lotto concession renewal fee paid through April 2026). Stage 1 (years 1-5, 2027-2031): FCF ramps linearly from $300M to $400M as the elevated capex cycle ends in 2028 (management's own guidance of '>$400M annual FCF' once capex normalizes to $600-650M and minority distributions are netted). Stage 2 (years 6-10): FCF grows 3%/yr off the $400M 2031 base. Terminal growth 2.0% after year 10. Discount rate 12.5% (reflects ~3.24x net-debt/EBITDA leverage and concession-renewal/regulatory risk inherent in government lottery licenses). Shares outstanding 183.37M; no separate net debt subtraction needed since FCFE is already net of interest.

Reasoning: Brightstar is a capital-intensive, debt-financed lottery/gaming concessionaire whose reported FCF is massively distorted this year by a one-time $1.67B(net, $1.43B EUR gross) Italy Lotto license renewal payment, so a naive trailing-FCF DCF would be meaningless; normalizing around management's own disclosed post-capex-cycle FCF target and applying a higher discount rate for leverage/concession risk gives a defensible intrinsic value. Current EV/EBITDA of ~4.8x (EV $5.61B vs FY26E EBITDA $1.175B) is well below typical lottery-sector multiples of 8-10x, consistent with the DCF showing upside versus the $9.87 market price.