LiveNation's Dominance Continues to Grow

The concert promoter, venue owner, and artist manager is seeing more ticket sales than ever and a growing roster of top-tier artists to tap into. Is this a no-brainer stock?

Mar 1, 2014 at 9:00AM

Of any public company directly involved in the still-ailing music industry, LiveNation (NYSE:LYV) is one of the best positioned to benefit tremendously amid the disruption. As is widely known by now, touring is the greatest source of income during an era in which record sales (even digital ones) are not enough to sustain the business. In its recent earnings, LiveNation proved this trend yet again as the concert promoter, venue owner, and artist manager reported a near-20% gain in concert attendance throughout 2013. Though it remains unprofitable and thus richly valued, LiveNation offers investors the most viable version of the music industry.

These go to 11!
A look at the headline numbers might not be too energizing, as LiveNation continues to lurk in the red with a net loss of $0.42 per share in the fourth quarter. The number is, however, half the loss that the company posted one year ago as ticket sales continue to grow at appetizing rates.

On an operating income level, the company was actually profitable for the full year, with $140 million. On an adjusted basis, the bottom line loss of $7 million was the nearest it has been to breakeven in some time. All in all, 2013 was a record year for the promoter behemoth.

But does that justify LiveNation's richly valued stock price?

Bang for your buck
LiveNation was the lead promoter for 21 of the top 25 grossing concerts last year. To say the company (which owns Ticketmaster) has a hold on the industry is an understatement. Advertising was up 26% while sponsorship revenue rose 11%. With top-tier artists operating under its managing subsidiaries, LiveNation increased the number of shows it delivered by 50%.

In short, the scale of this business demands respect.

To give a clearer picture of valuation, LiveNation's 2013 free cash flow was $300 million, which gives the company a P/FCF (trailing) of about 15.3 times. Value-seeking investors aren't going to swarm the stock anytime soon, but growth-hungry stock pickers can surely find richer valuations than those in the technology world.

Through the middle of February, LiveNation's ticket sales continued their climb -- up 8% year over year. Keep in mind that this is during a time in which consumers are so price-conscious that they won't visit Olive Garden.

Consumers interested in attending major shows or sporting events basically don't have a choice but to interact with LiveNation. While those pesky fees can be frustrating for shoppers, the extreme competitive moat sparkles in the eyes of investors. LiveNation and its properties should see tremendous growth in 2014. If growth is your game, consider investing in one of the few businesses that is loving the direction of today's music industry.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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