It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Live Nation Entertainment (NYSE:LYV). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
View our latest analysis for Live Nation Entertainment
How Fast Is Live Nation Entertainment Growing Its Earnings Per Share?
Live Nation Entertainment has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn’t be a fair assessment of the company’s future. As a result, we’ll zoom in on growth over the last year, instead. Impressively, Live Nation Entertainment’s EPS catapulted from US$0.85 to US$1.53, over the last year. It’s a rarity to see 79% year-on-year growth like that. The best case scenario? That the business has hit a true inflection point.
One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Live Nation Entertainment maintained stable EBIT margins over the last year, all while growing revenue 40% to US$21b. That’s encouraging news for the company!
The chart below shows how the company’s bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
While we live in the present moment, there’s little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Live Nation Entertainment?
Are Live Nation Entertainment Insiders Aligned With All Shareholders?
It’s said that there’s no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
While there was some insider selling, that pales in comparison to the US$1.0m that the Independent Director, James Iovine spent acquiring shares. We should note the average purchase price was around US$73.28. Big purchases like that are well worth noting, especially for those who like to follow the insider money.
Along with the insider buying, another encouraging sign for Live Nation Entertainment is that insiders, as a group, have a considerable shareholding. Notably, they have an enviable stake in the company, worth US$399m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company’s future.
Should You Add Live Nation Entertainment To Your Watchlist?
Live Nation Entertainment’s earnings per share have been soaring, with growth rates sky high. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Live Nation Entertainment deserves timely attention. Of course, profit growth is one thing but it’s even better if Live Nation Entertainment is receiving high returns on equity, since that should imply it can keep growing without much need for capital. Click on this link to see how it is faring against the average in its industry.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Live Nation Entertainment, you’ll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
What are the risks and opportunities for Live Nation Entertainment?
Live Nation Entertainment, Inc. operates as a live entertainment company.
View Full Analysis
Rewards
-
Trading at 39.2% below our estimate of its fair value
-
Earnings are forecast to grow 26.37% per year
-
Earnings grew by 83.2% over the past year
Risks
No risks detected for LYV from our risks checks.
View all Risks and Rewards
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.