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TKO Group Holdings (TKO) shares have fluctuated this week, catching the attention of investors tracking the company’s momentum. With recent movements in the stock price, many are considering how current valuations compare with TKO’s fundamentals.

See our latest analysis for TKO Group Holdings.

After months of strong gains, TKO’s recent price moves have been more subdued, but it is tough to ignore the underlying momentum. Year-to-date, the share price is up nearly 29%, and investors who held for the last 12 months have enjoyed a remarkable 55.75% one-year total shareholder return. This is a clear signal that market sentiment is firmly on the upswing, as optimism about growth and resilience overshadows short-term dips.

If you’re keen to spot other companies with this kind of accelerating momentum, it could be the perfect moment to broaden your perspective and discover fast growing stocks with high insider ownership

With shares still trading around 15% below analyst targets and robust growth in earnings, the big question is whether TKO is undervalued at current levels or already reflecting all of its future potential. Could this be the right entry point?

TKO’s current price-to-earnings (P/E) ratio stands at a high 63.5x. At a last close price of $184.09, this means investors are paying a hefty premium for each dollar of current earnings, especially when compared to fair and peer benchmarks.

The P/E ratio indicates how much investors are willing to pay today for a dollar of future earnings. For entertainment companies experiencing rapid growth or unique profit catalysts, a higher P/E can reflect optimism about future profits. However, excessively high multiples may also signal lofty expectations that require strong execution to justify these valuations.

While TKO’s P/E is lower than the peer average of 86.4x, it is significantly higher than the US Entertainment industry average of just 20x. In addition, our fair price-to-earnings estimate is 36.1x, which is much lower than the current market pricing for TKO. This suggests that unless future profits greatly exceed industry standards, the market may eventually adjust its expectations downward.

Explore the SWS fair ratio for TKO Group Holdings

Result: Price-to-Earnings of 63.5x (OVERVALUED)

However, slowing short-term price momentum or a significant revision in profit expectations could quickly shift sentiment and put pressure on TKO’s elevated valuation.

Find out about the key risks to this TKO Group Holdings narrative.

Switching gears, our SWS DCF model estimates TKO’s fair value at $215.77, which is about 14.7% above the current share price. This suggests the market may be underpricing TKO’s long-term cash flow potential, presenting a possible value opportunity not picked up by earnings multiples. Could this signal hidden upside for patient investors?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TKO Group Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 886 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you see things differently, or you’re someone who likes to dig into the numbers yourself, why not build your own take in just a few minutes by using Do it your way

A great starting point for your TKO Group Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Don’t let standout opportunities pass you by. Use the power of the Simply Wall Street Screener to confidently find your next smart stock move today.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Warren Buffett published his last annual address as CEO of Berkshire Hathaway (NYSE:BRK, BRK.B)) earlier this week, urging the company’s “unusually generous” shareholders to act kindly and decently in an increasingly greedy world.

“Greatness does not come about through accumulating great amounts of money, great amounts of publicity or great power in government,” the billionaire investor wrote.

“When you help someone in any of thousands of ways, you help the world,” he continued. “Kindness is costless but also priceless. Whether you are religious or not, it’s hard to beat The Golden Rule as a guide to behavior.”

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For decades, Buffett has been dispensing life advice in his missives to shareholders, which has helped establish him not just as an accomplished businessman, but also as someone who has mastered the secrets to living a better life.

“I write this as one who has been thoughtless countless times and made many mistakes but also became very lucky in learning from some wonderful friends how to behave better (still a long way from perfect, however),” he continued.

“My advice: Don’t beat yourself up over past mistakes — learn at least a little from them and move on,” he wrote. “It is never too late to improve. Get the right heroes and copy them. You can start with Tom Murphy; he was the best.”

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Murphy spent decades as the CEO of Capital Cities Communications and was one of the masterminds behind the broadcaster’s merger with ABC and eventually Disney (NYSE:DIS). He was a close friend of Buffett’s and served on Berkshire Hathaway’s board until 2022, when he resigned following a battle with COVID. He died later that year.

Buffett’s letter to shareholders comes at a similar transition point in his career. In May, he announced that he’d be stepping down as CEO of Berkshire Hathaway by the end of the year, naming long-time lieutenant Greg Abel as his successor.

“I will continue talking to you and my children about Berkshire via my annual Thanksgiving message,” he continued. “Berkshire’s individual shareholders are a very special group who are unusually generous in sharing their gains with others less fortunate. I enjoy the chance to keep in touch with you.”

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At 95, Buffett has long surpassed traditional retirement age. While he wrote that he “generally feel[s] good,” he acknowledged that physical diminishment has pushed him to a point where a step back is necessary.

“When balance, sight, hearing and memory are all on a persistently downward slope, you know Father Time is in the neighborhood,” he wrote.

Age may have impacted his ability to put in the long weeks, but it’s only increased his wisdom, he said.

“Choose your heroes very carefully and then emulate them. You will never be perfect, but you can always be better,” was his closing advice.

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This article ‘Kindness Is Costless But Also Priceless,’ Warren Buffett Urges Decency In His Annual Address originally appeared on Benzinga.com

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