US analysts are expecting Glu Mobile to report a positive EPS of USD 0.19 in 2013, following several years of losses. This implies a current valuation of 21x 2013 earnings. Out of the companies above, we think Glu Mobile is the most comparable with our top-pick G5 Entertainment, since it is also a pure mobile gaming play. The other companies have significant parts of their business stemming from classical consoles, PC, Facebook etc. Smartphones and tablets clearly have the best growth potential of all these devices in the years to come and both G5 Entertainment and Glu Mobile are 100% focused on that. We note that G5 Entertainment currently trades at 11.6x expected 2012 earnings, i.e. a 45% discount to the multiple US investors are willing to pay for Glu Mobile’s expected earnings 2013 (!). With a track record clearly speaking in G5’s favour, this seems hardly reasonable.
We also note that sectors such as the Nordic pulp & paper sector are currently trading at 13-14 times expected 2012 earnings (using analyst consensus estimates), while the growth for this industry is expected to be flat at best.