Live Nation (LYV) Benefits From Robust Demand for Live Events
Live Nation Entertainment, Inc.'s LYV pent-up demand for live events and robust ticket sales continues to drive the company’s performance. This, along with increased demand for digital ticketing and contactless transactions bode well. However, the rise in labor costs and inflation hurts. Let’s delve deeper.
Growth Drivers
The company has been benefiting from the pent-up demand for live events and robust ticket sales. It said that the robust performance of Ticketmaster drove the company’s overall profitability. Live Nation Entertainment said that with the world fully opened, demand for concerts remains high. During the second quarter of 2022, the company promoted more than 12,000 concerts for 33.5 million fans, each up over 20% compared to the second quarter of 2019.
For concerts, the company said that it has already sold more than 100 million tickets for shows in the second half of 2022 and 2023. For the remainder of 2022, confirmed show bookings are up more than 30%, owing to double-digit increases in every market and across all venue types. In third-quarter 2022, the company is likely to benefit from robust attendance. Live Nation Entertainment believes that several of its artists like Dave Matthews, Luke Bryan, Maroon 5, Travis Scott and Garth Brooks, among others, will have multi-year tours across the United States and Europe. This, in turn, will drive the company’s performance.
The coronavirus pandemic has acted as a boon for Ticketmaster. Demand for digital ticketing has increased as venues as well as artists are seeking contactless transactions due to the pandemic. Ticketmaster will benefit in 2022 from increased Live Nation concert ticket sales and additional sales from new clients. The company is benefiting from technology investments.
Moreover, the company’s sponsorship witnessed its best quarter. During second-quarter 2022, sponsorship revenues were $379.5 million, up from the prior-year quarter’s $67.2 million. During second-quarter 2022, the company gained from high growth in both on-site and online sponsorship as the U.S., the U.K. and Mainland Europe are all fully open.
Shares of the company have gained 1.8% in the past three months against the industry’s decline of 2%.
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Concerns
The company has been witnessing cost increases due to a rise in labor costs, supply chain challenges and inflation. It anticipates variable costs per fan, excluding talent, to increase 7% in 2022. An increase in costs is likely to hurt the company’s bottom line.
Maintaining liquidity has become an arduous task amid the coronavirus pandemic. Cash and cash equivalent as of Jun 30, 2022, totaled $5,866 million compared with $5,875 million as of Mar 31, 2022. Long-term debt at the end of the second quarter was $5,140 million compared with $5,147 million at the end of the first quarter of 2022. At the end of second-quarter 2022, the company had a debt-to-capital ratio of 1.0, almost flat sequentially.
The company currently has a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Consumer Discretionary sector are Hyatt Hotels Corporation H, Marriott International, Inc. MAR and Choice Hotels International, Inc. CHH.
Hyatt currently carries a Zacks Rank #2 (Buy). H stock has increased 22.1% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates growth of 78.1% and 93.9%, respectively, from the year-ago period’s reported levels.
Marriott currently carries a Zacks Rank #2. MAR has a trailing four-quarter earnings surprise of 1.4%, on average. The stock has increased 15.9% in the past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 44.6% and 93.7%, respectively, from the year-ago period’s reported levels.
Choice Hotels carries a Zacks Rank #2, at present. CHH has a trailing four-quarter earnings surprise of 20.4%, on average. The stock has decreased 0.5% in the past year.
The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 13.6% and 17.7%, respectively, from the year-ago period’s reported levels.
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