TKO Group Holdings (TKO) AI Stock Analysis

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TKO Group Holdings

(NYSE:TKO)

Rating:74Outperform

Price Target:

$179.00

▲(7.87%Upside)

TKO Group Holdings shows strong financial health with robust revenue and cash flow growth. The recent strategic acquisitions and positive earnings guidance further bolster its market position. However, the high P/E ratio suggests overvaluation, warranting cautious investor consideration. The stock's technical indicators show a stable but neutral trend.

Positive Factors

Financial Performance

TKO reported strong 1Q results, which included the recently acquired Endeavor assets, that beat revenue and adj. EBITDA forecast for both UFC and WWE.

Growth Prospects

The integration of recently acquired assets is expected to elevate earnings and cash flow growth.

Market Position

TKO trades at a substantial discount to its closest competitor despite having an equal-to-better growth profile.

Negative Factors

Corporate Governance

TKO acquired IMG and On Location from Endeavor in a $3.25B all-stock transaction that raised serious governance questions.

Relationship Challenges

Reports indicate the relationship between UFC and ESPN has deteriorated in recent years, with frustrations stemming from declining PPV sales, price hikes, and technical issues during events.

Strategic Alignment

The venture targets 12 annual fight cards in addition to large-scale 'super fights' like Canelo vs. Crawford, marking a material expansion outside of UFC’s core focus and raising questions about White’s bandwidth and strategic alignment.

TKO Group Holdings (TKO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$33.43B

Dividend Yield0.22%

Average Volume (3M)987.63K

Price to Earnings (P/E)98.1

Beta (1Y)0.77

Revenue Growth63.73%

EPS GrowthN/A

CountryUS

Employees890

SectorCommunication Services

Sector Strength91

IndustryEntertainment

Share Statistics

EPS (TTM)0.69

Shares Outstanding81,747,470

10 Day Avg. Volume860,716

30 Day Avg. Volume987,625

Financial Highlights & Ratios

PEG Ratio0.51

Price to Book (P/B)3.17

Price to Sales (P/S)0.00

P/FCF Ratio23.18

Enterprise Value/Market Cap0.47

Enterprise Value/Revenue1.54

Enterprise Value/Gross Profit9.19

Enterprise Value/Ebitda7.07

Forecast

1Y Price Target

$190.85

Price Target Upside15.01% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering14

TKO Group Holdings Business Overview & Revenue Model

Company DescriptionTKO Group Holdings (TKO) is a dynamic sports and entertainment company that operates primarily in the professional wrestling and mixed martial arts sectors. The company is a result of the merger between the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), combining the strengths of two of the most prominent organizations in combat sports and sports entertainment. TKO leverages its extensive media rights agreements, live event promotions, and diverse content offerings to engage a global audience.

How the Company Makes MoneyTKO Group Holdings primarily generates revenue through multiple streams including media rights, live events, consumer products, and sponsorships. Media rights are a significant revenue source, with the company negotiating lucrative deals with broadcasters and streaming platforms to distribute its content globally. Live events, such as pay-per-view and stadium shows, contribute to earnings through ticket sales and event-related merchandise. TKO also capitalizes on its brand by selling consumer products like apparel and collectibles. Sponsorship and advertising partnerships further enhance its revenue, with brands eager to associate with the company's high-profile events and large fanbase.

TKO Group Holdings Key Performance Indicators (KPIs)

Any

Media Rights and Content Revenue Breakdown

Media Rights and Content Revenue Breakdown
Analyzes income from media rights and content, highlighting the company's ability to monetize its content library and negotiate lucrative broadcast deals, crucial for sustained revenue growth.

Chart InsightsUFC's revenue shows volatility but recently hit a high, reflecting record-breaking events and strong partnerships, as noted in the earnings call. WWE's revenue, while fluctuating, benefits from global expansion and a successful WrestleMania, contributing to a positive outlook. Despite challenges in other segments, TKO's raised guidance and cost-saving measures indicate confidence in overcoming macroeconomic pressures and capitalizing on strategic acquisitions. Investors should note the company's focus on expanding its media footprint and enhancing profitability through operational efficiencies.

Data provided by:

Main Street Data

TKO Group Holdings Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: -1.79%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant achievements in UFC and WWE live events, partnerships, and WWE's expansion with Netflix. However, there were challenges in IMG's revenue and media rights for PBR. Despite macroeconomic concerns, overall performance and financial results were strong.

Q1-2025 Updates

Positive Updates

Record-Breaking UFC Events

UFC live events set new records in Q1, with a fight night in London delivering the highest-grossing fight night in company history and UFC 312 in Sydney setting the record for Australia's highest-grossing indoor arena event.

WWE's Global Expansion

WWE's partnership with Netflix expanded the brand's reach to 300 million subscribers weekly. WWE's content is now a mainstay on Netflix's global top 10, with significant engagement increases in Mexico, the UK, Australia, and Brazil.

IMG Renewals and Expansions

IMG announced major renewals, including partnerships with Conmebol through 2030, Euroleague Basketball through 2035-36, and Major League Soccer coverage on Apple TV, showcasing their global reach.

Strong Financial Performance

First quarter revenue was $1.269 billion, up 4%, with adjusted EBITDA of $417 million, an increase of 23%. Adjusted EBITDA margin increased to 33% from 28%.

WWE's Record-Setting WrestleMania

WrestleMania 41 in Las Vegas broke all-time records in gate, premium hospitality, viewership, sponsorship, merchandise, and social engagement.

Significant Increase in Partnerships

UFC partnerships and marketing revenue increased 32% to $64 million, driven by new partnerships and renewals, including the largest sponsorship deal in company history with Monster Energy.

Negative Updates

IMG Segment Revenue Decline

IMG segment revenue decreased by 13% to $476 million, with adjusted EBITDA down 10%. The decline was primarily due to On Location's performance for the Super Bowl and Collegiate Bowl games.

Challenges with PBR Media Rights

Corporate and other revenue included PBR and reflected a decrease in media rights due to the early termination of the Meritree Media content distribution deal.

Macroeconomic Concerns

Although not yet seeing a slowdown, management expressed caution due to potential macroeconomic impacts on consumer behavior, particularly in premium hospitality and marketing budgets.

Company Guidance

During TKO Group Holdings, Inc.'s Q1 2025 earnings call, the company raised its full-year guidance due to outperforming internal expectations for revenue and profitability. Key metrics highlighted include first-quarter revenue of $1.269 billion, an increase of 4%, and adjusted EBITDA of $417 million, up 23%, with a margin of 33%. The UFC segment reported revenue of $360 million, a 15% increase, and an adjusted EBITDA margin of 63%. WWE's revenue was $392 million, up 24%, with an adjusted EBITDA margin of 50%. TKO's updated full-year 2025 guidance now targets revenue between $4.49 and $4.56 billion and adjusted EBITDA of $1.49 to $1.53 billion. Notably, the company has identified $40 million in estimated run-rate cost savings, with $15 million expected to be realized in 2025. The guidance reflects the integration of newly acquired businesses IMG, On Location, and PBR, and excludes the impact of a $300 million nonrecurring payment related to the UFC antitrust settlement and M&A activities.

TKO Group Holdings Financial Statement Overview

Summary

TKO Group Holdings demonstrates strong revenue and cash flow growth, which highlights its operational capabilities. However, challenges in profitability with a low net profit margin and return on equity persist. The balance sheet shows moderate leverage and a stable asset base, suggesting a need for improved cost management and shareholder returns.

Income Statement

Positive

TKO Group Holdings shows robust revenue growth, with a significant increase in total revenue from 2023 to 2024. The gross profit margin remains strong, although the net profit margin is relatively low due to lower net income. The EBIT and EBITDA margins show positive operational efficiency, but the decline in EBIT implies potential cost pressures or higher expenses.

Balance Sheet

Positive

The company's balance sheet reflects moderate leverage, with a debt-to-equity ratio suggesting a balanced capital structure. The equity ratio indicates a stable asset base, but the return on equity (ROE) is low, indicating that shareholder returns are not optimal. The substantial increase in total assets aligns with the company's expansion efforts.

Cash Flow

Very Positive

Cash flow statements highlight strong operating cash flows, with an impressive increase in free cash flow, suggesting efficient cash management. The operating cash flow to net income ratio is high, indicating that the company is effectively converting its income into cash. The free cash flow growth rate is commendable, demonstrating solid financial health.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.80B	1.67B	1.14B	1.03B	891.15M
	Gross Profit
1.90B	1.16B	814.56M	696.34M	623.79M
	EBIT
282.90M	446.66M	544.39M	391.14M	314.13M
	EBITDA
676.31M	611.09M	603.15M	341.40M	292.90M
	Net Income Common Stockholders
9.41M	-35.23M	387.27M	272.34M	177.16M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
525.56M	235.84M	180.57M	874.69M	593.40M
	Total Assets
12.70B	12.69B	3.58B	4.30B	1.32B
	Total Debt
3.04B	3.03B	2.78B	2.85B	719.96M
	Net Debt
2.51B	2.79B	2.60B	1.98B	257.86M
	Total Liabilities
3.98B	3.84B	3.01B	3.05B	934.89M
	Stockholders Equity
4.09B	4.11B	568.92M	1.25B	383.99M
Cash Flow		Free Cash Flow
508.46M	419.75M	489.32M	430.10M	329.55M
	Operating Cash Flow
583.41M	468.38M	501.72M	441.24M	351.24M
	Investing Cash Flow
-59.05M	12.28M	-13.26M	-11.48M	-21.93M
	Financing Cash Flow
-232.26M	-424.47M	-1.18B	162.51M	-199.61M

TKO Group Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price165.94

Price Trends

50DMA

156.82

Positive

100DMA

155.43

Positive

200DMA

141.53

Positive

Market Momentum

MACD

1.74

Negative

RSI

58.37

Neutral

STOCH

88.32

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TKO, the sentiment is Positive. The current price of 165.94 is above the 20-day moving average (MA) of 161.41, above the 50-day MA of 156.82, and above the 200-day MA of 141.53, indicating a bullish trend. The MACD of 1.74 indicates Negative momentum. The RSI at 58.37 is Neutral, neither overbought nor oversold. The STOCH value of 88.32 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TKO.

TKO Group Holdings Risk Analysis

TKO Group Holdings disclosed 65 risk factors in its most recent earnings report. TKO Group Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The planned issuance of Class B common stock and TKO OpCo Units to the EDR Parties will dilute the ownership and voting interests. Q4, 2024

We cannot guarantee we will conduct share repurchases or pay dividends in any specified amounts or particular frequency. Q4, 2024

We may fail to complete the Endeavor Asset Acquisition if certain required conditions, many of which are outside our control, are not satisfied. Q4, 2024

TKO Group Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	81 Outperform	$23.14B	13.39	16.89%	0.99%	15.70%	26.73%
FOX	80 Outperform	$23.14B	12.26	16.89%	1.08%	15.70%	26.73%
DIS	78 Outperform	$202.30B	22.98	8.75%	0.83%	5.33%	431.28%
TKO	74 Outperform	$33.43B	98.06	4.19%	0.22%	63.73%	―
WMG	64 Neutral	$13.66B	30.46	89.20%	2.75%	-0.91%	-14.87%
WBD	63 Neutral	$23.87B	―	-27.69%	―	-5.58%	-254.85%
Sector *	61 Neutral	$14.37B	5.86	-4.31%	3.69%	2.75%	-35.55%

* Communication Services Sector Average

Performance Comparison

TKO

TKO Group Holdings

165.94

58.31

54.18%

DIS

Walt Disney

113.90

12.08

11.86%

FOXA

Fox

54.37

21.06

63.22%

FOX

Fox

49.79

18.77

60.51%

WMG

Warner Music Group

26.37

-3.60

-12.01%

WBD

Warner Bros

9.82

1.70

20.94%

TKO Group Holdings Corporate Events

M&A TransactionsBusiness Operations and Strategy

TKO Group Holdings Completes Major Acquisition

Positive

May 8, 2025

On February 28, 2025, TKO Group Holdings completed the acquisition of several businesses, including Professional Bull Riders and various events businesses, for approximately $3.25 billion. This strategic acquisition is expected to significantly impact TKO’s operations by expanding its portfolio and enhancing its market positioning in the sports and entertainment industry.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.