This FTSE 250 stock is outperforming Rolls-Royce so far this year!
When it comes to strong share price performance, Rolls-Royce has been the poster child over the past year or so. This is well-deserved, given the 69% jump in 2025. However, some FTSE 250 stocks have done just as well, if not better, but have flown under the radar. Here’s one I’ve just discovered.
Up over 80% in 2025
I’m referring to Rank Group (LSE:RNK). It’s a UK-based gambling and entertainment operator with over 100 physical venues. It has a rapidly expanding digital operation comprising more than 80 online brands. I don’t invest in gambling companies out of principle, but that doesn’t mean other investors feel the same way.
The stock’s up a whopping 114% over the last year, with an 83% increase in just the past six months, easily surpassing Rolls-Royce. The surge has come for a variety of reasons. One notable achievement was its inclusion in the FTSE 250 in May. When a stock’s promoted to the index, it typically experiences a spike due to purchases from index trackers. Any fund that replicates the FTSE 250 must immediately take on the relevant stocks, so there’s a period of buying.
Another factor has been its solid financial performance. An update from April showed that like-for-like net gaming revenue (NGR) for the quarter grew 10.9% to £195.6m compared to the same period last year. The digital channel experienced a 14.7% growth.
Interestingly, some of the recent rally in the stock is on the anticipation of a reform that CEO John O’Reilly recently spoke about. He expects “the Government to publish the statutory instruments for land-based casino reforms in the coming weeks and anticipate the roll out of additional machines and sports betting to commence during the summer.”
Looking ahead
It isn’t easy to know precisely how the reform will impact the business in the future. But it’s being seen as a positive. The company has a market capitalisation of £733m. Therefore, it has plenty of room to scale and grow before it starts to stagnate. The price-to-earnings ratio’s 24.95. This is indeed above the FTSE 250 average, but for a growth stock that has doubled in value over the past year, it’s not excessively expensive. From that angle, I feel it can keep moving higher if the earnings per share increase by a similar amount.
One concern is the nature of the sector. ESG’s getting more and more popular, with gambling companies often getting excluded from portfolios. As mentioned, I don’t invest in gambling companies, so please keep this in mind.
At a company-specific level, it’s exposed to a high level of competition. There’s little to differentiate the large players in this area, so they may struggle to continue growing and take market share away from other firms.
When I put everything together, I think there’s a strong case to be made for Rank Group continuing to do well in the coming year. Even though I’ll be looking for more ESG-friendly stocks, investors who are comfortable in this area may wish to consider it.
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
