Live Nation Entertainment, Inc. (LYV - Get Rating) in Beverly Hills, Calif., is a live entertainment company. It operates through Concerts; Ticketing; and Sponsorship & Advertising segments.

LYV’s first-quarter revenue increased 520.3% year-over-year to $1.80 billion. Analysts anticipated higher revenue growth, however. LYV expects nearly two-thirds of its $375 million in expected capital expenditure to be spent on revenue-generating projects. The company also expects its full year adjusted operating income to free cash flow to return to a percentage range in the 50s.

The stock has declined 29.7% in price year-to-date, while it has gained 2.6% over the past year to close the last trading session at $84.13. It is currently trading 34.1% below its 52-week high of $127.75, which it hit on Nov. 5, 2021.

Here is what could influence LYV’s performance in the upcoming months:

Stretched Valuation

In terms of forward non-GAAP P/E, LYV’s 114.77x is 625.6% higher than the 15.82x industry average. And its 18.61x forward EV/EBITDA is 123.1% higher than the 8.34x industry average. The stock’s 33.49x forward EV/EBIT is 127.3% higher than the 14.73x industry average.

Mixed Financials

LYV’s revenue increased 520.3% year-over-year to $1.80 billion for the first quarter, ended March 31, 2022. However, the company missed the consensus revenue estimate by 3.9%. Its adjusted operating income came in at $209 million, compared to a $151.70 million adjusted operating loss a year ago. Its total estimated tickets sold increased 548.8% year-over-year to 111.29 million. Also, its net loss came in at $48.95 million, compared to a $322.72 million loss in the year-ago period.

Favorable Analyst Estimates

Analysts expect LYV’s EPS for the quarter ending Sept. 30, 2022, to increase 510.5% year-over-year to $1.16. Its revenue for the quarter ending June 30, 2022, is expected to increase 655.4% year-over-year to $3.95 billion. And it surpassed the Street’s EPS estimates in three of the trailing four quarters.

Lower-than-industry Profitability

LYV’s trailing-12-month net income margin is negative compared to the 5.45% industry average. And its 4.03% trailing-12-month EBITDA margin is 80.5% lower than the 20.77% industry average. Furthermore, the stock’s 31.97% trailing-12-month gross profit margin is lower than the 50.99% industry average.

POWR Ratings Reflect Uncertainty

LYV has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. LYV has a D grade for Stability, which is in sync with its 1.28 beta.

LYV is ranked #4 out of 16 stocks in the Entertainment – Sports & Theme Parks industry. Click here to access LYV’s growth, Value, Momentum, Sentiment, and quality ratings.

Bottom Line

LYV is currently trading below its 50-day and 200-day moving average of $108.86 and $104.21, respectively, indicating a downtrend. Although LYV is increasing its capital expenditure to increase its revenues, its lower-than-industry profitability and high valuation might pressure the stock in the near term. Thus, we think it could be wise to wait for a better entry point in the stock.

How Does Live Nation Entertainment, Inc. (LYV) Stack Up Against its Peers?

While LYV has an overall POWR Rating of C, one might want to consider investing in the following Entertainment – Sports & Theme Parks stock with a B (Buy) rating: Endeavor Group Holdings, Inc. (EDR - Get Rating).

LYV shares fell $0.88 (-1.05%) in premarket trading Thursday. Year-to-date, LYV has declined -30.45%, versus a -17.64% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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