Pollard Banknote: Weak Margins Don't Define the Entire Story.

Pollard Banknote's recent performance has been driven by weak margins, but the company's iGaming business and potential gains from the stock mean it has already surpassed the "bear case" price target. Despite single-digit gains, the stock remains a viable option for investors.

Title: Pollard Banknote's Q2 Results: Missed Estimates, but Strong iLottery Performance

In its second-quarter report, Pollard Banknote (PBL) missed revenue and profit estimates, but the company's iLottery business and recent acquisitions have analysts maintaining an optimistic outlook. The company's revenue for Q2 2025 grew by 3.6% year-over-year to C$142.7 million, falling short of analyst expectations by about C$6 million [1]. Adjusted EBITDA was C$29.2 million, with net income at C$8 million, or C$0.29 per share.

The primary driver of the revenue miss was a C$4.5 million increase in instant ticket sales due to higher average selling prices, offset by a C$9.2 million decrease in volumes, mainly due to the timing of customer orders. The company's iLottery profits, driven by strong digital demand in North Carolina and Virginia, hit a record C$19.5 million, up 20% from the previous year [2].

Pollard Banknote's recent acquisitions of Pacific Gaming and Venne have boosted charitable gaming sales by C$6.8 million. Despite the weak margins, the company's management expects better ticket sales in the third quarter and anticipates higher average selling prices for instant tickets. Analysts remain confident in the company's resilience against economic uncertainty, with a unanimous "buy" rating [1].

The stock trades at 10 times projected earnings for the next year, with analysts suggesting a nearly 40% upside. The digital transformation in lottery gaming, as seen in Pollard's iLottery performance, underscores the company's potential for growth. While the company faces short-term challenges, its strong iLottery business and recent acquisitions position it well for future success [2].

References
[1] https://finimize.com/content/pollard-banknote-misses-estimates-but-stays-upbeat-on-growth
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_PLXCD4DD8:0-pollard-banknote-q2-revenue-misses-estimates/