Live Nation (LYV)

Live events and entertainment company Live Nation (NYSE:LYV) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 11% year on year to $3.38 billion. Its GAAP loss of $0.32 per share was 17.7% above analysts’ consensus estimates.

Company Overview

Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

Competitors in the live event promotion and management sector include Endeavor (NYSE:EDR), Disney (NYSE:DIS), and MSG Entertainment (NYSE:MSGE).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Live Nation grew its sales at a decent 15.2% compounded annual growth rate. Its growth was slightly above the average consumer discretionary company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Live Nation’s recent performance shows its demand has slowed as its annualized revenue growth of 12.4% over the last two years was below its five-year trend. Note that COVID hurt Live Nation’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

This quarter, Live Nation missed Wall Street’s estimates and reported a rather uninspiring 11% year-on-year revenue decline, generating $3.38 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 15.7% over the next 12 months, an improvement versus the last two years. This projection is particularly healthy for a company of its scale and implies its newer products and services will fuel better top-line performance.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Live Nation’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 4.1% over the last two years. This profitability was lousy for a consumer discretionary business and caused by its suboptimal cost structure.

In Q1, Live Nation generated an operating profit margin of 3.4%, up 4.5 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Live Nation’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q1, Live Nation reported EPS at negative $0.32, up from negative $0.56 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Live Nation’s full-year EPS of $2.91 to shrink by 4.3%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Live Nation has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 6.2%, subpar for a consumer discretionary business.

Live Nation’s free cash flow clocked in at $264.7 million in Q1, equivalent to a 7.8% margin. This result was good as its margin was 5.9 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

Over the next year, analysts predict Live Nation’s cash conversion will slightly fall. Their consensus estimates imply its free cash flow margin of 6.8% for the last 12 months will decrease to 3.6%.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Live Nation historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 14%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Live Nation’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Live Nation reported $7.16 billion of cash and $8.29 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.38 billion of EBITDA over the last 12 months, we view Live Nation’s 0.5× net-debt-to-EBITDA ratio as safe. We also see its $86 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Live Nation blew past analysts’ EPS expectations this quarter. On the other hand, its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $131.20 immediately following the results.

Updated: May 16, 2025 at 10:50 PM EDT

Before deciding whether to buy Live Nation or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Live Nation’s business quality ultimately falls short of our standards. Although its revenue growth was decent over the last five years and Wall Street believes it will continue to grow, its projected EPS for the next year is lacking. And while the company’s astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its Forecasted free cash flow margin suggests the company will ramp up its investments next year.

Live Nation’s P/E ratio based on the next 12 months is 63x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $160.51 on the company (compared to the current share price of $142).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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