Last update on 2024-06-06

Live Nation Entertainment (LYV) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Live Nation Entertainment (LYV) achieved a Piotroski F-Score of 7 out of 9 for 2023, showcasing its strong financial health and growth potential.

Short Analysis - Piotroski Score: 7

We're running Live Nation Entertainment (LYV) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Live Nation Entertainment (LYV) has been evaluated using the Piotroski F-Score, which ranges between 0 and 9 based on profitability, liquidity, and operating efficiency criteria. The company scored a 7 out of the possible 9 points. In 2023, LYV showed strong signs of recovery with a positive net income of $563,280,000 and a substantial cash flow from operations of $1,370,794,000. The Return on Assets (ROA) improved from 0.0192 in 2022 to 0.0317 in 2023. LYV's leverage decreased from 0.4215 in 2022 to 0.3746 in 2023, indicating reduced debt reliance. However, the current ratio dropped slightly from 0.9827 to 0.9616, and gross margin fell from 0.2604 to 0.2399, reflecting some challenges in liquidity and operational efficiency. An unusual drop in the number of outstanding shares from 224,809,558 to 0 in 2023 suggests significant corporate actions.

Insights for Value Investors Seeking Stable Income

Considering Live Nation Entertainment's (LYV) Piotroski F-Score of 7, the company appears to have a strong financial position with key indicators pointing to recovery and growth. The positive net income, high operating cash flow, and improved asset turnover are promising. However, the slight decline in the current ratio and gross margin along with the unusual change in outstanding shares warrants a more careful look. Interested investors should delve deeper into these areas before making a decision but overall, LYV seems to be a potentially good investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Live Nation Entertainment (LYV)

Company has a positive net income?

Net income, also known as net profit or bottom line, indicates a company's overall profitability and is critically important for evaluating its financial health.

Live Nation Entertainment's (LYV) net income for 2023 is $563,280,000, which is positive, thereby earning 1 point in the Piotroski score. Historically, the company has experienced volatility, with significant losses in years like 2009 (-$228.39M) and 2020 (-$1.72B), largely due to external market conditions like the financial crisis and Covid-19. However, the positive net income in 2023 marks a significant recovery and growth phase for the company.

Company has a positive cash flow?

One of the critical indicators called for in Piotroski's F-Score is Cash Flow from Operations (CFO). CFO gauges the amount of cash a company generates from its usual business operations.

In 2023, Live Nation Entertainment (LYV) reported a CFO of $1,370,794,000, which is positive. This reflects positively on Live Nation's financial health by illustrating that the company generates sufficient cash from its core operations. This is noteworthy especially considering that in 2020, the CFO was as low as -$1,083,388,000 due to the pandemic's impact on the live events industry. The sharp recovery to a substantially positive CFO signals robust operational resilience and places Live Nation in a favorable light from Piotroski’s metric perspective, earning it a full 1 point in this area.

Return on Assets (ROA) are growing?

ROA, or Return on Assets, measures a company's profitability relative to its total assets. A rising ROA indicates improving efficiency in using assets to generate earnings, which is crucial for stakeholder confidence.

For 2023, Live Nation Entertainment (LYV) reported an ROA of 0.0317, up from 0.0192 in 2022. This increase is a positive sign, suggesting that the company has become more efficient in converting its assets into net income. Adding 1 point to the Piotroski score is justified in this case. However, when compared to the industry median ROA figures, which are significantly higher (0.4033 in 2023), LYV's performance still lags behind its industry peers. Despite this, the year-over-year improvement is a good indicator of progress.

Operating Cashflow are higher than Netincome?

This criterion evaluates if a company's operating cash flow exceeds its net income, indicating higher earnings quality.

In 2023, Live Nation Entertainment (LYV) reported an Operating Cash Flow of $1,370,794,000 compared to a Net Income of $563,280,000. This marks a significant positive differential, adding 1 point under the Piotroski score. Over the past 20 years, the company has seen varied operating cash flows, including years of negative values, such as -$1,083,388,000 in 2020 and -$52,836,000 in 2008, correlating with challenging periods for the company. The higher operating cash flow in 2023 suggests improved business operations and better cash management, which is favorable for investors and showcases the firm’s robust operational health and reduced dependency on accrual-based earnings. This trend bodes well for LYV as it moves forward.

Liquidity of Live Nation Entertainment (LYV)

Leverage is declining?

Change in leverage refers to the change in the company’s financial structure by comparing the proportion of debt used to finance the company's assets in two consecutive periods.

Since the leverage for Live Nation Entertainment (LYV) has decreased from 0.4215 in 2022 to 0.3746 in 2023, we add 1 point. This indicates a positive trend as the company has reduced its reliance on debt. Historically, LYV's leverage has seen considerable fluctuations: from a high of 0.5950 in 2020 to lower figures around 0.26-0.33 in earlier years. This improvement from 2022 to 2023 reflects a more resilient financial structure, potentially increasing investor confidence and the company’s stability.

Current Ratio is growing?

The current ratio, a measure representing the company's capacity to cover short-term obligations with short-term assets, is essential in understanding the liquidity health of Live Nation Entertainment. By comparing the current ratios from different years, stakeholders can gauge the company's improving or deteriorating ability to cover its short-term liabilities.

In 2023, Live Nation Entertainment's current ratio stands at 0.9616, slightly down from 0.9827 in 2022. This drop indicates a minor deterioration in the ability to cover short-term liabilities with short-term assets. When contextualizing this trend within a 20-year frame alongside industry medians, the current ratio mirrors the previously observed low points in the company's liquidity cycles. Historically, Live Nation has seen fluctuations in its current ratio, for instance, an increase to 1.1278 in 2014 and a fall to 0.8296 in 2008. Compared to the industry median ratio (which rose to 1.0522 in 2023), Live Nation's current ratio seems less favorable. The 2023 figure signifies a small step back in liquidity for the company, thus earning a point of 0 in this analysis.

Number of shares not diluted?

Change in Shares Outstanding shows how many shares are held by shareholders and is an indicator of delution. A decreasing number of shares is generally positive, indicating potential stock buybacks.

In 2022, the Outstanding Shares for Live Nation Entertainment were 224,809,558. By 2023, this number dropped to 0, indicating a significant decrease. Given the data over the past 20 years, it's clear that 2023 saw a notable reduction compared to the steady increase in prior years. This decreasing trend from 224,809,558 shares to 0 in 2023 is unusual and suggests an extraordinary corporate action, likely leading to a point scored for this criterion, as it technically reflects a massive reduction in shares. However, it is crucial to understand the context behind this sharp drop, as it might involve fundamental changes within the company.

Operating of Live Nation Entertainment (LYV)

Cross Margin is growing?

The criterion of Gross Margin assesses a company's ability to convert revenue into profit. It is vital to consider as it reflects operational efficiency and market competitiveness.

Comparing Live Nation's Gross Margin of 0.2399 in 2023 to 0.2604 in 2022, there is a decrease. Thus, no points are added for this criterion. This downward trend indicates reduced efficiency in managing production costs compared to revenues. Historically, Live Nation's Gross Margin has fluctuated but generally trailed behind the industry median Gross Margin, which was 0.4033 in 2023. This deviation highlights persistent margin pressures, signifying potential operating challenges or competitive pricing strategies affecting profitability.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It's crucial for evaluating operational efficiency and performance over time.

In 2023, Live Nation Entertainment reported an Asset Turnover ratio of 1.2804, up from 1.081 in 2022. This notable increase signifies that LYV has improved its ability to generate revenue from its assets. Historically, the company has seen fluctuations in its Asset Turnover, with a low of 0.1726 in 2020, likely due to the pandemic's impact, and a high of 1.8868 in 2004. The 2023 figure suggests a return to a more stable and efficient asset utilization, earning LYV 1 point for this criterion.