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The DCF model estimates TKO’s intrinsic value at $157.40 per share. Compared with the current market price, this implies the stock is trading at an 18.7% premium. In other words, it is 18.7% overvalued according to this approach.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for TKO Group Holdings.

Our Discounted Cash Flow (DCF) analysis suggests TKO Group Holdings may be overvalued by 18.7%. Find undervalued stocks or create your own screener to find better value opportunities.

For profitable companies like TKO Group Holdings, the price-to-earnings (PE) ratio is a widely used and practical way to judge valuation. The PE ratio measures how much investors are willing to pay for each dollar of earnings, making it especially relevant for established companies with consistent profits.

What is considered a ‘fair’ PE ratio can vary depending on expectations for future growth and perceived risk. Generally, the faster a company’s earnings are likely to grow or the safer its profits, the higher the PE investors will be willing to pay. The opposite is true for companies facing uncertainty or low growth prospects.

At the moment, TKO Group Holdings trades at a PE ratio of 72.77x. That is noticeably higher than the Entertainment industry average of 27.32x and also above the company’s peer average of 61.11x. However, simply comparing to peers or the sector paints only part of the picture. This is where Simply Wall St’s “Fair Ratio” comes in, which is designed to provide a more tailored benchmark. By factoring in specifics like TKO’s earnings growth, profit margins, market cap, risk profile, and industry trends, the Fair Ratio helps define what a reasonable PE should be for the stock today.

The Fair Ratio for TKO Group Holdings is 36.13x. Compared to the company’s actual PE of 72.77x, the stock appears significantly overvalued on this metric, even after accounting for its growth potential and sector characteristics.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier, we hinted that there’s an even smarter way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple but powerful tool that lets you connect your personal story and insights about a company directly to its financial forecast and fair value calculations, making your investment thesis more tangible and actionable.

With Narratives, you’re no longer just crunching numbers. You’re building a story about TKO Group Holdings, outlining your assumptions for future revenue, profit margins, and fair value, and seeing how these compare with the market. This feature is accessible to everyone on the Simply Wall St Community page, where millions of investors share and update their own perspectives.

Narratives help you decide when to buy, hold, or sell by instantly comparing your Fair Value estimate to the current stock price, making the decision-making process more grounded and flexible. As new developments, news, or earnings come in, Narratives update dynamically so your outlook stays current.

For example, some investors may see TKO Group Holdings’ fair value as high as $180 based on aggressive growth expectations, while others set it below $120 due to risk concerns. This showcases just how diverse and useful these perspectives can be.

Do you think there’s more to the story for TKO Group Holdings? Create your own Narrative to let the Community know!

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.

Companies discussed in this article include TKO.

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