Live Nation Entertainment (LYV) Stock Stays Hard To Read After Its 93% Run

Live Nation Entertainment has seen its share price advance strongly over the past few years, which naturally puts the focus on whether the current US$168.77 level is supported by what the business can generate in cash. With the stock giving back some ground in recent weeks, the question now is how that recent share move lines up against the value implied by its cash flows.

Over the past 3 years the stock has returned 92.9%, which raises the issue of whether the market is now asking investors to pay too much or too little for its future cash flows.
The group’s model of promoting live events and monetising ticketing and sponsorship can shift both the timing and durability of cash generation, which feeds directly into how a Discounted Cash Flow (DCF) estimate stacks up against the current share price.
Prefer to judge Live Nation Entertainment on sales? See why Live Nation Entertainment’s 1.5x P/S tells a different valuation story.

The issue now is whether Live Nation Entertainment’s recent share price, after a 16.1% gain year to date and some short term weakness, is appropriately backed by the cash flows implied in its intrinsic value estimate.

If you want to sanity check Live Nation Entertainment’s cash flow question against a broader set of ideas, you can compare it with companies in the 31 high quality undervalued stocks.

Where Does Live Nation Entertainment Sit on Cash Flow?

The Discounted Cash Flow (DCF) approach here uses Live Nation Entertainment’s projected free cash generation to frame what today’s $168.77 share price is asking you to pay. Over the last twelve months the group produced about $1.70b of free cash flow in $ terms, so this is already a cash generative business rather than a blue sky story.

Analysts feeding into the model expect Live Nation Entertainment’s free cash flow to grow further over the coming years, with projections indicating a rising profile rather than a shrinking one. Those estimates then tail off into steadier growth, which fits a company that already operates at scale but is still investing in more events, venues and sponsorship inventory. When those cash flows are discounted back, the DCF output suggests an intrinsic value that sits broadly in line with where the stock trades today, so the current $168.77 price does not screen as either obviously stretched or clearly cheap on these cash flow assumptions. Find out what Live Nation Entertainment could be worth using our Discounted Cash Flow (DCF) estimate.