Poker machine giant Aristocrat (ASX: ALL) and crop protection and seed technology company Nufarm (ASX: NUF) were down -5.7% and up 9.6% respectively at hour out from the open after both posted what appeared to be strong full year FY22 results.

Let’s look at what captured the market’s imagination this morning.

Aristocrat

Despite supply chain disruptions and mixed operating conditions across key markets, Aristocrat managed to deliver a 27% jump in FY22 profit (NPATA) $1.1bn on group revenue of $5.6bn, up 17.7% on the previous period.

Earnings (EBITDA) were 20% higher at $1.9bn, which was a beat against Goldman Sachs expectations.

The company will pay a final fully franked dividend of 26 cents per share (CPS), taking the full year fully franked dividends to 52 CPS.

Cash of $660m was returned to shareholders through dividends and on-market share buy-back

North America stands out

Management was quick to remind investors that strong revenue growth across the Americas and A&NZ, was offset by offset headwinds experienced by its mobile games entity Pixel United.

“While we are focusing first on the North American i-Gaming vertical, we ultimately aim to be the leading gaming platform within the global online RMG industry,” CEO Trevor Croker noted.

“Throughout the year, we continued to invest in competitive product portfolios to drive further share growth across key segments, greater operational diversification and deeper business capability.”

But what clearly troubled investors this morning was company’s less than robust commentary on the Pixel United business.

Outlook

Assuming no material change in economic and industry conditions and despite lower growth in bookings and profit from Pixel United, Croker expects the group to deliver NPATA growth over the full year to September 2023.

While the gaming business is expected to continue performing strongly, Croker warned that the Pixel United business is expected to deliver lower growth in bookings and profit compared to previous years.

FY22 highlights

• 17.7% increase in operating revenue to $5,573.7m.

• Americas margin expanded 2.7 percentage points to 56.1%.

• Americas Outright Sales units up 66%.

• Strong cash flow generation and balance sheet with liquidity of $3.8bn.

• Continuing to invest in online Real Money Gaming (RMG) business with launch of Anaxi.

• Net cash position of $564m.

What brokers think

Aristocrat’s share price is down -24% over 12 months but has been trending higher since mid-May.

Consensus is Strong Buy.

Goldman Sachs is Buy rated with a target price of $42.50.

Based on the seven brokers that cover Aristocrat (as reported on by FN Arena) the stock is currently trading with 20% upside to the target price of $42.52.

Aristocrat’s share price over 12 months.

Nufarm

Due to favourable seasonal conditions and attractive soft commodity prices – which generated strong demand for seeds and crop protection products - Nufarm reported a 24% jump in underlying earnings (EBITDA) to $447m on revenue of $3.8bn, up 17% on the previous period.

The group announced a 6 cents per share (CPS) final dividend, bringing its full-year offerings to 10 CPS, up 150% year-on-year.

Assuming normal seasonal conditions and on a constant currency basis, management guided to modest underlying earnings (EBITDA) growth in FY23.

Based on conditions remaining favourable the group is also on track to meet or exceed FY26 revenue aspirations.

CEO Greg Hunt notes the seeds business continued to increase earnings as a result of strategic investments in innovative technologies.

Hunt also notes despite several industry supply chain challenges, the APAC segment performed strongly, while the North American market is also doing "extremely well".

Highlights for the 12 months to September 30

• Statutory profit (NPAT) up 65% to $107.4m

• Underlying net profit after tax more than doubled to $133.2m

• North American underlying earnings (EBITDA) up 42% to $148m

• Seed Technologies’ underlying earnings (EBITDA) increased 26% to $59m

What’s new

Management notes new strategic initiatives, including a ten-year offtake and market development agreement with bp to sell Nuseed Carinata oil.

Then there’s the US$25m acquisition of energy cane assets from the Brazilian industrial biotechnology group GranBio, which is expected to accelerate growth.

“We made significant progress on all our strategic growth initiatives across omega-3, bioenergy, seeds and crop protection; and we have a promising pipeline of opportunities,” noted Hunt.

“Our strong balance sheet positions us well to benefit from opportunities as they arise.”

What brokers think

Nufarm’s share price is up 16% over 12 months.

Consensus is Strong Buy.

Based on Morningstar’s fair value of $6.91 the stock appears to be undervalued.

Based on the seven brokers that cover Nufarm (as reported in by FN Arena) the stock is trading with 13.6% upside to the target price of $6.71.

Following what UBS notes was a "clean" result with positive outlook today, the broker retains a Buy rating and target price of $7.40.

Due to strong crop fundamentals and improvement to costs and margins, Credit Suisse continues to consider Nufarm a compelling long-term growth story and has upgrade the stock to Outperform from Neutral.

The target price decreases to $6.85 from $6.96.

Nufarm's share price over 12 months.