Madison Square Garden Entertainment Corp. (NYSE:MSGE) just released its latest second-quarter results and things are looking bullish. The company beat forecasts, with revenue of US$403m, some 4.5% above estimates, and statutory earnings per share (EPS) coming in at US$2.59, 31% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the eight analysts covering Madison Square Garden Entertainment are now predicting revenues of US$943.1m in 2024. If met, this would reflect a credible 5.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to crater 27% to US$1.09 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$926.9m and earnings per share (EPS) of US$0.65 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$41.71, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Madison Square Garden Entertainment, with the most bullish analyst valuing it at US$45.00 and the most bearish at US$38.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Madison Square Garden Entertainment's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 57% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.1% annually. Even after the forecast slowdown in growth, it seems obvious that Madison Square Garden Entertainment is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Madison Square Garden Entertainment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$41.71, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Madison Square Garden Entertainment analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Madison Square Garden Entertainment that you need to take into consideration.
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