DCF Studio

    LYV · NYQ · Communication Services

    Live Nation Entertainment, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 73.66

    Market price

    USD 167.12

    Implied upside

    -55.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 22.6x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 73.66-55.9%
    Exit multiple
    USD 198.96+19.1%
    Market price
    USD 167.12

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 28.9bnUSD 33.2bnUSD 38.1bnUSD 43.7bnUSD 50.1bn+14.7%
    EBITUSD 1.2bnUSD 1.4bnUSD 1.6bnUSD 1.9bnUSD 2.2bn+14.7%
    NOPATUSD 985.4mUSD 1.1bnUSD 1.3bnUSD 1.5bnUSD 1.7bn+14.7%
    Add depreciation & amortisationUSD 714.4mUSD 819.7mUSD 940.6mUSD 1.1bnUSD 1.2bn+14.7%
    Less capital expenditureUSD -827.9mUSD -949.9mUSD -1.1bnUSD -1.3bnUSD -1.4bn+14.7%
    Less increase in working capitalUSD -84.4mUSD -96.8mUSD -111.1mUSD -127.5mUSD -146.3m+14.7%
    Free cashflow to firmUSD 787.5mUSD 903.6mUSD 1.0bnUSD 1.2bnUSD 1.4bn+14.7%
    Discount factor0.95580.87330.79780.72890.6660-
    Present valueUSD 752.7mUSD 789.1mUSD 827.2mUSD 867.2mUSD 909.1m+4.8%
    Present Value Of The ForecastUSD 4.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.078Reported 1.116, pulled toward 1.0 (Blume)
    Cost of equity10.93%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 38.9bn78.9% of capital
    Total debtUSD 10.4bn21.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.45%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 73.66

    80% of EV

    Forecast FCFF, final year
    USD 1.4bn
    Capex at depreciation, working capital in reinvestment
    USD 2.2bn
    Less reinvestment at g/ROIC (23.4% of NOPAT)
    USD -506.3m
    Capitalised
    USD 1.7bn
    ROIC (reported)
    10.7%
    Terminal value, undiscounted
    USD 24.4bn
    Terminal value, discounted
    USD 16.2bn
    Enterprise value
    USD 20.4bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 17.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 198.96

    92% of EV

    Terminal value, undiscounted
    USD 68.0bn
    Terminal value, discounted
    USD 45.3bn
    Enterprise value
    USD 49.4bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 46.1bn

    Spread between methods: 92%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.45%103.30106.98111.34116.60123.12
    8.45%85.1887.1189.3191.8694.86
    9.45%71.6872.6273.6674.8276.12
    10.45%61.2461.6061.9862.3762.78
    11.45%53.4953.7453.9954.2454.49

    Outlined: this model. Green text: above today's price of 167.12. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year14.7%34.4%+19.7pp
    EBIT margin4.3%9.5%+5.2pp
    Discount rate9.5%6.0%-3.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.