It hasn't been a great afternoon session for Live Nation Entertainment investors, who have watched their shares sink by -2.6% to a price of $165.04. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
The Market May Be Overvaluing Live Nation Entertainment's Earnings and Assets:
Live Nation Entertainment, Inc. operates as a live entertainment company worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, Live Nation Entertainment has a trailing 12 month P/E ratio of 70.2 and a P/B ratio of 105.46.
Live Nation Entertainment has moved 62.4% over the last year compared to 15.5% for the S&P 500 — a difference of 46.8%. Live Nation Entertainment has a 52 week high of $175.25 and a 52 week low of $102.72.
Strong Revenue Growth but Not Enough Current Assets to Cover Current Liabilities:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $11,548 | $1,861 | $6,268 | $16,681 | $22,726 | $23,156 |
| Operating Margins | 3% | -89% | -7% | 4% | 5% | 4% |
| Net Margins | 1% | -93% | -10% | 2% | 2% | 4% |
| Net Income (M) | $70 | -$1,725 | -$651 | $266 | $557 | $896 |
| Net Interest Expense (M) | $158 | $227 | $282 | $278 | $350 | $326 |
| Depreciation & Amort. (M) | $220 | $246 | $223 | $226 | $267 | $300 |
| Diluted Shares (M) | 219 | 212 | 217 | 232 | 231 | 236 |
| Earnings Per Share | -$0.02 | -$8.12 | -$3.09 | $0.52 | $1.34 | $2.74 |
| EPS Growth | n/a | -40500.0% | 61.95% | 116.83% | 157.69% | 104.48% |
| Avg. Price | $64.76 | $55.07 | $89.68 | $104.37 | $93.6 | $164.84 |
| P/E Ratio | 223.31 | -6.78 | -29.02 | 196.92 | 69.33 | 59.51 |
| Free Cash Flow (M) | $146 | -$1,297 | $1,628 | $1,488 | $924 | $1,079 |
| CAPEX (M) | $324 | $214 | $153 | $347 | $439 | $647 |
| EV / EBITDA | 26.58 | -10.08 | -104.61 | 25.05 | 16.31 | 34.14 |
| Total Debt (M) | $3,309 | $4,909 | $5,731 | $5,903 | $6,593 | $6,438 |
| Net Debt / EBITDA | 1.54 | -1.68 | -4.34 | 0.31 | 0.27 | 0.3 |
| Current Ratio | 1.02 | 0.96 | 0.97 | 0.98 | 0.95 | 0.99 |
Live Nation Entertainment has rapidly growing revenues and increasing reinvestment in the business and generally positive cash flows. Additionally, the company's financial statements display a strong EPS growth trend and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.99. Finally, we note that Live Nation Entertainment has weak operating margins with a positive growth rate.
