Today we're going to take a closer look at large-cap Consumer Discretionary company Live Nation Entertainment, whose shares are currently trading at $84.17. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Live Nation Entertainment's P/B and P/E Ratios Are Higher Than Average:
Live Nation Entertainment, Inc. operates as a live entertainment company. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, Live Nation Entertainment has a trailing 12 month P/E ratio of 56.1 and a P/B ratio of 86.68.
When we divideLive Nation Entertainment's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.66, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Growing Revenues With Increasing Reinvestment in the Business:
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|---|
Revenue (MM) | $10,788 | $11,548 | $1,861 | $6,268 | $16,681 | $21,201 |
Gross Margins | 26% | 27% | 25% | 31% | 26% | 25% |
Operating Margins | 3% | 3% | -89% | -7% | 4% | 5% |
Net Margins | 1% | 1% | -6% | 1% | 2% | 4% |
Net Income (MM) | $90 | $118 | -$103 | $42 | $409 | $749 |
Net Interest Expense (MM) | $141 | $158 | $227 | $282 | $278 | $330 |
Depreciation & Amort. (MM) | $387 | $444 | $485 | $416 | $450 | $514 |
Free Cash Flow (MM) | $702 | $146 | -$1,297 | $1,628 | $1,485 | $1,220 |
Capital Expenditures (MM) | $240 | $324 | $214 | $153 | $347 | $446 |
Net Current Assets (MM) | -$113 | -$65 | -$532 | -$609 | -$619 | $768 |
Long Term Debt (MM) | $2,733 | $3,271 | $4,855 | $5,145 | $5,283 | $6,546 |
Net Debt / EBITDA | 2.48 | 2.64 | -2.45 | -1593.12 | 1.89 | 3.45 |
Live Nation Entertainment has positive expected EPS Growth, irregular cash flows, and significant leverage. We also note that the company has growing revenues and increasing reinvestment in the business working in its favor. However, the firm suffers from slimmer gross margins than its peers and consistently negative margins with a positive growth rate.