We feel now is a pretty good time to analyse Live Nation Entertainment, Inc.'s (NYSE:LYV) business as it appears the company may be on the cusp of a considerable accomplishment. Live Nation Entertainment, Inc. operates as a live entertainment company. The US$11b market-cap company posted a loss in its most recent financial year of US$4.9m and a latest trailing-twelve-month loss of US$795.2m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Live Nation Entertainment's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Live Nation Entertainment is bordering on breakeven, according to the 12 American Entertainment analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$44m in 2022. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 97% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Live Nation Entertainment's growth isn’t the focus of this broad overview, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Live Nation Entertainment currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Live Nation Entertainment which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Live Nation Entertainment, take a look at Live Nation Entertainment's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is Live Nation Entertainment worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Live Nation Entertainment is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Live Nation Entertainment’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.