See Tickets And France Billet Will Strengthen International Markets

Key Takeaways

• Acquisitions and expansion into international markets are set to strengthen market position and enhance revenue and EBITDA growth.
  
• Focus on profitable venues and higher ticket pricing strategies boosts margins and supports improved net earnings.
  
• The company's earnings and margin growth face challenges from inconsistent revenue effects, regulatory costs, competitive pressures, and operational hurdles in expanding markets.

Catalysts

Operates in the leisure events market in Germany, Italy, the United States, Switzerland, Austria, the United Kingdom, Sweden, Finland, Spain, Brazil, Denmark, the Netherlands, and internationally.

• The acquisition and integration of See Tickets and the increased majority stake in France Billet are expected to enhance CTS Eventim's market position and offer additional synergies, likely boosting revenue and EBITDA in future periods.
  
• The company's expansion strategy into international markets, including stronger penetration in the U.K. and U.S. ticketing markets through See Tickets, could support further revenue growth and improvements in international market share.
  
• Continued significant growth in online ticket sales and the introduction of new metrics like Gross Transaction Value (GTV) can lead to higher revenue streams, as these are indicative of pricing power and expanding consumer base.
  
• The focus on operating highly profitable venues, such as the Vienna and MILAN arenas, despite an indication not to own these assets long-term, could enhance margins and contribute to steady EBITDA growth due to the high profitability associated with venue operations.
  
• The ongoing strategic efforts to capitalize on higher average ticket prices in North America as compared to Europe, alongside potential growth from superfan monetization initiatives, could improve net margins and overall earnings.

CTS Eventim KGaA Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming CTS Eventim KGaA's revenue will grow by 6.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.4% today to 12.0% in 3 years time.
• Analysts expect earnings to reach €410.0 million (and earnings per share of €4.23) by about May 2028, up from €318.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €452 million in earnings, and the most bearish expecting €339 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.4x on those 2028 earnings, down from 31.2x today. This future PE is greater than the current PE for the GB Entertainment industry at 15.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.52%, as per the Simply Wall St company report.

CTS Eventim KGaA Future Earnings Per Share Growth

Risks

• The company's revenue and EBIT growth, while positive, is partly dependent on nonrecurring effects and compensations from previous years. These factors may not recur, potentially affecting future earnings consistency. (Impact: Earnings)
  
• The Live Entertainment segment faces cost pressure and uncertainty in future revenue growth, with management expressing caution. This may limit potential profitability and result in EBIT growth being more conservative compared to other segments. (Impact: Net Margins, Earnings)
  
• Regulatory challenges, particularly in Europe, regarding secondary ticketing markets, may introduce additional operational and compliance costs or affect revenue streams if regulations become restrictive. (Impact: Revenue, Net Margins)
  
• The slow increase in mobile ticketing penetration suggests potential missed revenue opportunities through lower customer engagement and personalization. This may limit long-term growth and competitive advantages in digital offerings. (Impact: Revenue, Net Margins)
  
• The company's expansion into high-cost and competitive markets like the U.S. may not immediately yield significant revenue gains, as seen by flat revenues in the region. The high competition and investment requirements can pressure margins and delay profitability. (Impact: Revenue, Net Margins)

Valuation

• The analysts have a consensus price target of €108.667 for CTS Eventim KGaA based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €120.0, and the most bearish reporting a price target of just €95.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €3.4 billion, earnings will come to €410.0 million, and it would be trading on a PE ratio of 30.4x, assuming you use a discount rate of 6.5%.
• Given the current share price of €103.8, the analyst price target of €108.67 is 4.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.