Is Live Nation Still Attractive After Regulatory Scrutiny and High Valuation Multiples?

• Wondering if Live Nation Entertainment at around $128 a share is still worth the hype, or if most of the upside is already priced in? You are not alone.
• The stock has slipped about 1.9% over the last week, is down 14.2% over the past month and roughly flat year to date, but it is still sitting on hefty 3 year and 5 year gains of 80.7% and 82.9% that keep long term investors smiling.
• Recent headlines have revolved around regulatory scrutiny of ticketing practices and ongoing debate about competition in live events, which can spook some investors and create pockets of volatility. At the same time, continued strength in global touring demand and a packed concert calendar have helped underpin the longer term growth story even as sentiment swings.
• On our checks, Live Nation scores a 2 out of 6 valuation score, suggesting it looks undervalued on only a couple of traditional metrics. We will walk through what the main valuation models say and then finish with a more holistic way to think about what the stock is really worth.

Live Nation Entertainment scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Live Nation Entertainment Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today, using a required rate of return.

For Live Nation Entertainment, the latest twelve month Free Cash Flow is about $1.80 billion. Analysts and internal estimates see this rising steadily, with projected Free Cash Flow of roughly $2.17 billion by 2029 and continuing to grow through the following years based on Simply Wall St extrapolations.

When those projected cash flows are discounted back using a 2 Stage Free Cash Flow to Equity model, the estimated intrinsic value comes out at about $136.68 per share. Against a recent share price around $128, the DCF points to the stock trading at roughly a 6.0% discount to its calculated fair value, which suggests it is only slightly undervalued on this metric.

Result: ABOUT RIGHT

Live Nation Entertainment is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Live Nation Entertainment.

Approach 2: Live Nation Entertainment Price vs Earnings

For profitable companies, the Price to Earnings, or PE, ratio is a straightforward way to gauge how much investors are willing to pay today for each dollar of current earnings. This makes it a useful cross check against the DCF. In general, faster growth and lower perceived risk justify a higher PE, while slower growth or higher uncertainty usually call for a lower, more conservative multiple.

Live Nation currently trades on a lofty PE of about 92.6x, well above both the Entertainment industry average of around 19.7x and the broader peer group average near 78.9x. On the surface, that makes the stock look richly valued versus typical sector benchmarks.

However, Simply Wall St’s Fair Ratio framework refines this comparison by estimating what PE multiple would be reasonable for Live Nation given its specific earnings growth outlook, profit margins, size, industry dynamics and risk profile. On this basis, the Fair Ratio for Live Nation is about 36.8x, which is materially below the current 92.6x the market is paying. That sizable gap suggests investors are pricing in far more optimism than the fundamentals justify right now.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Live Nation Entertainment Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of a company’s future with the numbers behind its fair value. A Narrative is your story for Live Nation Entertainment, where you spell out what you expect for its future revenue, earnings and margins, and then turn that story into a financial forecast and an estimated fair value. On Simply Wall St, Narratives are an easy, accessible tool inside the Community page, used by millions of investors to compare fair value estimates to the current share price and decide whether a stock looks like a buy, hold or sell. Because Narratives update dynamically when new information arrives, such as fresh earnings or regulatory news, they stay in sync with the real world rather than a static spreadsheet. For example, one Live Nation Narrative might assume strong international expansion and produce an estimated fair value near $195, while a more cautious Narrative focused on regulatory risk could produce an estimate closer to $130, illustrating how different perspectives can result in different target prices.

Do you think there's more to the story for Live Nation Entertainment? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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