Rank has been re-energised over the past year. FY15 results showed encouraging progress, but we believe this is only the start, with digital gaming beginning to grow strongly and plenty of scope to leverage the Mecca and Grosvenor brands with a true multi-channel offering. Rank’s underlying business is strongly cash generative, with debt on track to be eliminated by the end of FY18 in the absence of any acquisitions. The shares have performed well, but still trade at a discount to the sector (FY16 EV/EBITDA only 8.3x) and a sum-of-the parts suggests a value of 290-360p.
