Madison Square Garden Entertainment Stock Appears To Be
- By GF Value
The stock of Madison Square Garden Entertainment (NYSE:MSGE, 30-year Financials) gives every indication of being , according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $94.85 per share and the market cap of $2.3 billion, Madison Square Garden Entertainment stock shows every sign of being . GF Value for Madison Square Garden Entertainment is shown in the chart below.
, which averaged 2% over the past five years.
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Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Madison Square Garden Entertainment has a cash-to-debt ratio of 1.68, which ranks in the middle range of the companies in the industry of Media - Diversified. Based on this, GuruFocus ranks Madison Square Garden Entertainment's financial strength as 5 out of 10, suggesting fair balance sheet. This is the debt and cash of Madison Square Garden Entertainment over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Madison Square Garden Entertainment has been profitable 2 over the past 10 years. Over the past twelve months, the company had a revenue of $233.3 million and loss of $8.96 a share. Its operating margin is -176.66%, which ranks in the bottom 10% of the companies in the industry of Media - Diversified. Overall, GuruFocus ranks the profitability of Madison Square Garden Entertainment at 2 out of 10, which indicates poor profitability. This is the revenue and net income of Madison Square Garden Entertainment over the past years:
Growth is probably one of the most important factors in the valuation of a company. GuruFocus' research has found that growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. Madison Square Garden Entertainment's 3-year average revenue growth rate is in the middle range of the companies in the industry of Media - Diversified%. Madison Square Garden Entertainment's 3-year average EBITDA growth rate is 0%, which ranks in the bottom 10% of the companies in the industry of Media - Diversified.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Madison Square Garden Entertainment's return on invested capital is -15.77, and its cost of capital is 7.32. The historical ROIC vs WACC comparison of Madison Square Garden Entertainment is shown below:
Overall, The stock of Madison Square Garden Entertainment (NYSE:MSGE, 30-year Financials) appears to be . The company's financial condition is fair and its profitability is poor. Its growth ranks in the bottom 10% of the companies in the industry of Media - Diversified. To learn more about Madison Square Garden Entertainment stock, you can check out its 30-year Financials here. To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener. This article first appeared on GuruFocus.
