Flutter Entertainment and AVEVA shares lead FTSE 100 in August

While the FTSE 100 fell almost 2% over the course of August amid further uncertainty for UK equities, betting company Flutter Entertainment and software firm AVEVA Group bucked the downside pressure to become the top performers stocks for the month.

While many FTSE 100 stocks ended August in the red, Flutter Entertainment [FLTR.L] and AVEVA Group [AVV.L] managed to deliver strong returns and were the index’s biggest winners in August.

Flutter Entertainment shares rose 30.8% in August after the betting holding company posted better than expected H1 results on 12 August. The second best performer was Software firm AVEVA Group, which climbed 18.8% during the month after news emerged that French conglomerate Schneider Electric [SU.PA], which already owns 60% of the company, was considering buying the remaining 40%.

With the FTSE 100 falling 1.8% over the course of August, there have only been a few equities that traded in the green last month as continued economic headwinds brought difficulties for many UK companies.

The month’s winners, however, were able to keep the index buoyant and allowed it to outperform many other major global indices. The S&P 500 and the Dow Jones Industrial Average fell 4.2% and 4.1%, respectively, during August, while the Nasdaq Composite was down 4.6% over the month.

US brands prop up Flutter Entertainment

Flutter Entertainment, which was created from the merger of Paddy Power and Betfair and owns brands such as Sky Betting and US-based FanDuel, gained traction last month after it released second-quarter earnings.

The group noted that increased gambling safety measures in the UK delivered a blow to its revenue within the country, costing the group £48m in the first half of the year. Despite this challenge in Flutter’s home market, investors were upbeat after the company’s US subsidiary FanDuel made up for its UK losses, boosted by the continued legalisation of sports betting across US states. FanDuel, which has captured more than half of the country’s sports betting market, helped to prop up revenues, which jumped nearly 11% to £3.4bn in the six months to 30 June.

This strong US performance bolstered the Flutter share price in August. However, even after the recent share price surge, the company is still down 10.8% since the beginning of the year as of 13 September, continuing its downward trend of the past couple of years.

Analysts, however, have a positive outlook for Flutter shares. Out of 24 analysts polled by the Financial Times, three gave the shares a ‘buy’ rating, 12 believe the shares will ‘outperform’, three gave a ‘hold’ rating and the remaining one analyst recommended to ‘sell’.

AVEVA shares boosted on takeover potential

AVEVA shares jumped 26.9% on 24 August after Schneider Electric revealed it was considering a full takeover of the Cambridge-based software developer. The French conglomerate must decide by 21 September whether it will make an official offer for AVEVA under UK takeover rules. On 12 September, Reuters reported that the two parties were nearing a deal. Since the announcement was made the AVEVA share price has risen 39.1%, though it is still down 9.1% year-to-date as of 13 September.

The news comes after a recent disappointing performance for the software company. AVEVA has been pursuing a software-as-a-service (SaaS) subscription model, which has smoothed earnings while removing the large one-off licence payments that often boosted short-term profits. Its withdrawal from the Russian market and rising staffing costs in the past few months have added to its challenges.

However, analysts have been optimistic about AVEVA shares since the announcement of a possible takeover. Out of 15 analysts polled by the Financial Times as of 13 September, four gave the shares a ‘buy’ rating, nine believed the shares would ‘outperform’ and two rated the shares a ‘hold’, while none gave an ‘underperform’ or ‘sell’ rating.