Stock of the Week: Evolution AB - A Very Negative Quarter
What is next for the leading live casino company?
Here is the 37th edition of “Stock of the Week”. You can find all the previous analyses and my articles on my main page (for an easier search, use a computer, mobile version is harder to navigate).
Here is the link to the previous “Stocks of the Week” as well
Evolution AB reported disappointing results, with year-over-year declines in revenue, EPS, and EBITDA. What are the underlying challenges, and what is the outlook for the company? Let’s take a closer look.
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The stock at a glance
Recent news
Evolution announced plans for several new titles before year-end 2025
Amid volatility, Evolution is deploying technical countermeasures against cyber threats and adjusting compliance measures in markets like the Philippines and India to stay ahead of evolving rules
Evolution revealed that Playtech Software Limited hired Black Cube to produce and distribute a defamatory 2021 short-seller report falsely accusing Evolution of improper business practices, aimed at anti-competitive harm
Evolution is actively growing its US presence, with studios in New Jersey, Pennsylvania, Connecticut, Michigan, and West Virginia, and plans for further state-by-state rollouts
The company maintains ongoing dialogues with US regulators to ensure compliance, navigating complex state-specific laws
Last earnings report
In Q3 2025, revenue declined by 2.4%, while EBITDA and EPS fell by 18.9% and 20.4%, respectively.
By geography, Europe and Asia underperformed, while growth persisted in the US and Latin America. However, North America remains a relatively small contributor, accounting for just 15% of group revenue. The main bright spot is the continued rise in regulated markets, which now represent 46% of total revenue.
Analysts’ recommendations
Oct, 24. Goldman Sachs. Hold. 920SEK —> 785SEK
Oct, 24. Kepler Chevreux. Buy. 1,000SEK —> 955SEK
Oct, 24. Berenberg. Hold. 700SEK —> 630SEK
Oct, 24. DNB Carnegie. Buy. 1,100SEK —> 980SEK
Oct, 24. JP Morgan. Sell. 675SEK —> 600SEK
My analysis
The situation is becoming increasingly challenging, with negative growth signaling a clear slowdown. Despite a few positive elements (such as continued expansion in the US and a rising share of revenue from regulated markets) overall performance remains weak
Headcount declined QoQ, suggesting limited short-term improvement. Management has pointed to the recent cyberattack as a key factor, but this likely explains only a small part of the current trend
On the valuation side, the investment case remains partly supported by an attractive dividend yield of over 4%, substantial share buybacks exceeding 400M€ in 2025, and a nearly 10% free cash flow yield. At current levels, the stock does not require strong growth to justify its valuation
However, further downside risk remains if growth fails to rebound. Any sign of renewed momentum could unlock meaningful upside, but the near-term dynamics are unfavorable. Overall, maintaining a Hold stance seems reasonable. Increasing exposure at this point could lead to an oversized position and elevated risk
Technical analysis
I have defined three buying zones that I find interesting for long-term investments during pullbacks. While these zones may not be reached, I am prepared for a market (or stock) consolidation to seize long-term opportunities. For me, this approach offers a better risk/reward ratio.
Of course, this is just my opinion, and I am sharing it with you, but each investor should decide on their own investment style. With that said, here are my three buying zones for Evolution.
Buying zone 1. 640SEK
Buying zone 2. 560SEK
Buying zone 3. 420SEK
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Great post!
Evolution’s stumble this quarter feels like a reality check for a company long treated as untouchable. The fundamentals aren’t broken, but the shine has dulled. Europe is soft, Asia is weaker, and U.S. growth is still too small to offset it. The dividend and buybacks give some cushion, yet it’s hard to ignore the slowing pulse. Patience here makes sense, but conviction should wait for proof that this isn’t the start of a longer fade.