Brightstar Lottery PLC: A Strong Case for Long-Term Investors
Brightstar Lottery PLC (NYSE: BRSL) has been getting attention lately after a bullish report appeared on Value & Error’s Substack. As of February 2, the stock was trading at $14.36, showing mixed valuation signals. According to Yahoo Finance, its trailing P/E stood at 160.89, while its forward P/E dropped to a much more reasonable 9.46.
This big gap suggests investors may be overlooking Brightstar’s long-term potential.
A Focused, High-Margin Lottery Business 🎯
After selling its gaming and digital divisions to Apollo last year, Brightstar became a pure-play global lottery operator. That move sharpened its focus and strengthened its core business.
Today, the company operates seven of the world’s ten largest lotteries, giving it a powerful position in the industry.
What makes Brightstar stand out?
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✅ Recession-resistant business model
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✅ Strong recurring revenue
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✅ EBITDA margins close to 50%
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✅ Low operating costs
These factors combine to create a steady and highly profitable operation, even during economic slowdowns.
Why the Stock Looks Undervalued 💎
Despite its strong fundamentals, Brightstar is currently trading at an EV/EBITDA multiple of just 4.5x, which is well below many of its competitors.
Some investors remain cautious due to a higher-than-expected fee tied to renewing Italy’s national lottery license. While this raised short-term concerns, it hasn’t changed the strength of Brightstar’s core business.
In fact, this hesitation may have created a pricing opportunity for long-term investors.
Strong Cash Flow and Shareholder Rewards 💰
One of Brightstar’s biggest advantages is its low capital needs. The company doesn’t have to spend heavily to keep its business running, which means more cash flows back to investors.
Here’s what management expects:
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📈 Over $7 billion in gross cash from 2025 to 2028
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💵 Around $1.7 billion returned to shareholders
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📊 6.2% dividend yield
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🔁 Ongoing share buyback program
Most of this cash will also support organic growth, helping the company expand while still rewarding shareholders.
Stable Returns with Long-Term Upside 🚀
Even with some uncertainty around licensing, Brightstar’s lottery operations remain solid and dependable. Its predictable revenue streams and disciplined spending make it attractive from a risk-reward perspective.
Key strengths include:
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✔️ Reliable cash flow
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✔️ High profit margins
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✔️ Clear capital strategy
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✔️ Global market leadership
As more investors recognize these advantages, the stock could see a valuation re-rating over time.
How Brightstar Compares to Other Opportunities
In the past, analysts highlighted DraftKings Inc. (DKNG) for its strong position in U.S. sports betting and expected earnings growth in 2026. However, its stock dropped about 17.38% due to market volatility.
Value & Error takes a similar positive view of Brightstar but emphasizes its more stable, recession-resistant lottery business and consistent cash generation.
Hedge Fund Interest and Market Outlook
Brightstar is currently not among the 30 most popular hedge fund stocks. At the end of the third quarter, 32 hedge funds held positions in BRSL, down slightly from 34 in the previous quarter.
While institutional interest has dipped, this doesn’t erase the company’s long-term potential.
That said, some investors believe certain AI stocks may offer faster and higher returns in the short term. Compared to those high-growth plays, Brightstar represents a more balanced option focused on steady income and long-term appreciation.
Bottom Line 📌
Brightstar Lottery PLC offers a rare mix of:
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⭐ High margins
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⭐ Recession-proof revenue
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⭐ Strong dividends
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⭐ Consistent cash flow
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⭐ Long-term growth potential
For investors looking for reliable income and gradual capital gains, Brightstar stands out as a compelling option in the global lottery space. With solid fundamentals and shareholder-friendly policies, it may be well-positioned for future upside as market confidence grows.
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