Price Recovers as the Investors are Not Done Yet

At the end of March this year, Entain PLC (LON: ENT) bounced off its support level of £1,164 and started rising. This bullish rally continued until early May this year when the stock price reached a new high of £1,516. Fast forward two months, the mighty has fallen to its all-time low after the half-yearly report arrived in August.

What caused the bulls to run away?

Entain PLC has shown impressive growth in its revenue, which has increased by 13% to £2.38B as compared to the previous year. The Gross profit has also seen a growth of 4.26% and is currently reported to be £1.21bn. The gross margins of Entain PLC are impressive at 51%, which indicates the company is making money after paying direct costs. Coming down to the indirect costs or selling and general expenses, it is important to note that the company is currently facing an operating loss of £370M.

Moreover, The P.E. ratio of the firm is currently negative, which can be attributed to the company’s net profit loss. While the net margin has been declining for the past two years and currently stands at -20%. Furthermore, the company’s debt-to-equity ratio of 1.20 indicates that it is high on debt as compared to its retained earnings

The first thought

Being a small-cap company, Entains’ management is focused on revenue growth by reinvesting heavily into the business after paying off the cost of goods and by looking at the consistent revenue growth, this strategy is working.

Technical analysis and prediction of ENT stock price

As of this writing, the ENT stock price is trading at the level of £948 after coming back from its all-time low of £897. The bullish candles are being made, and the bullish investors will likely test the immediate resistance level of £1036.

The Bulls will try to break over the resistance level if the momentum is strong enough. If the breakout occurs, the stock will reach its 2nd resistance level of £1145. One of the significant things to notice is that “the RSI line is below its oversold zone of 30”. It means the bulls will have enough room to push the price above till the RSI reaches its overbought level of 70.

Conclusion

The ENT stock price was rising until August of this year. The primary reason for the fall was the half-yearly report, where the company made positive growth but negative operating income. This stock is near its all-time low, but the bulls are trying to overcome the immediate resistance. The current price actions reveal that the Bulls might succeed in their mission.

Technical Levels

Support:£898

Resistance: £1036, and £1145

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.