GAMB

We rate Gambling.com Group Ltd (GAMB) as a Reduce with a composite score of 49.6/100 at a current price of $4.21. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (82th percentile) and value (79th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (11th percentile) and investment (34th percentile) tempers our overall conviction. We assign a Wide Moat rating (80/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Gambling.com Group Ltd holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.6/100 places it at rank #2072 in our full 7,333-stock universe. At $524M in market capitalization, Gambling.com Group Ltd is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 16%, though momentum at the 11th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 94% (+34.5pp vs sector) narrow to operating margins of 28% (+24.5pp vs sector) and net margins of 24.1%, yielding a gross-to-net conversion rate of 26%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $4.21, Gambling.com Group Ltd appears undervalued relative to its fundamentals. Our value factor score of 79/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 4.8x (a 80% discount to the sector median of 23.7x), EV/EBITDA of 1.0x (discounted to peers), P/B of 1.2x, P/S of 0.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Gambling.com Group Ltd. The stock presents a balanced risk profile: risk factors are within normal ranges. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

We identify no major risk factors at this time. The company's stability factor sits at the 54th percentile with quality at the 82th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 94% provide a buffer against cost pressures; conservative leverage (22% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Gambling.com Group Ltd's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 99.6%, disciplined leverage (22% D/E), best-in-class net margins of 24.1%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Gambling.com Group Ltd meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 68.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Gambling.com Group Ltd receives a Reduce rating with a composite score of 49.6/100 (rank #2072 of 7,333). Our quantitative framework assigns a Wide Moat (80/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 52/100.

Our analysis does not support a constructive view on Gambling.com Group Ltd at this time. The combination of the current quantitative profile, medium uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.