World Wrestling Entertainment: a giant in television entertainment that dominates the market.

An American company that has such a strong brand that is known around the world? That's exactly what World Wrestling Entertainment is. Today, let's take a quick look at the company so we know what it's all about. The company has managed to build a very strong position in the sports entertainment market during its long existence, which it still maintains.

In America, sports are very popular. One of the most popular sports here is American football, with combat sports following close behind. Today we are going to take a look at a company that has been in the sports entertainment segment for many years, and has managed to spread the American phenomenon called wrestling to all corners of the world. This company has produced many famous actors who are now starring in action movies such as Dwayne Johnson.

World Wrestling Entertainment $WWE+2.7%

A chart of the stock price over the past 5 years.

This is a sports entertainment company that has been around since 1952. The company has gone through several changes over the years, but it is currently one of the largest and most successful entertainment companies in the world. The company primarily generates revenue through live events, pay-per-view events and television rights. The company also generates significant revenue through merchandise sales and its digital platforms such as the WWE Network.

The WWE brand has a devoted and passionate fan base that spans the globe. The company has a strong social media presence and has been able to connect with fans through its shows and digital platforms. WWE has a roster of talented performers who bring excitement and entertainment to the ring. The company has been successful in developing new stars and maintaining the popularity of established stars. The company has faced competition from other wrestling organizations such as All Elite Wrestling (AEW), but remains a dominant player in the industry because of its brand.

The company operates in several business segments, including:

  • Live Events: the WWE generates revenue through live events, including the sale of tickets and merchandise at these events.
  • Pay-per-view events: WWE generates revenue through pay-per-view events, which are special events that fans can purchase and watch live or on-demand.
  • Television rights: WWE generates revenue through the sale of television rights to its programming, including Raw, SmackDown and NXT.
  • Digital Platforms: WWE generates revenue through its digital platforms, including the WWE Network, which is a streaming service that provides access to live events, original programming and an extensive library of on-demand videos.
  • Consumer Products: WWE generates revenue through the sale of consumer products, including merchandise such as t-shirts, hats and toys, as well as home entertainment products such as DVD and Blu-ray releases.
  • Licensing: WWE generates revenue through licensing arrangements such as video games, books and other merchandise.

These business segments help WWE diversify its revenues and provide a number of opportunities for growth and expansion.

The company's revenues have grown at an average rate of about 8% per year over the past 5 years. The company's net income has grown at a compound annual growth rate of roughly 20% over the past 5 years. This points to our growing net margins, which have grown by an average of about 31% over the past 5 years. This points to a certain competitive advantage. In fact, the company has such a strong brand that people are willing to spend more money on its products and services. The company has also started to retire its shares through buybacks, which adds to shareholder value. These buybacks may be minimal, but still, it's better than nothing.

Net margin growth over the past 5 years.

The company also has a relatively strong balance sheet, which reflects a fair amount of financial stability. The company has its short-term liabilities well covered by short-term assets. As far as long-term debt is concerned, it is roughly 1.18 relative to equity. This is therefore an acceptable ratio. In terms of net asset value per share, I'm looking at roughly USD 7 per share.

Operating cash flow has been growing at an average rate of about 12% per annum over the last 5 years. The company's capital expenditures have increased rapidly over the past year. By 2022, these expenses were more or less flat. This of course has had an impact on free cash flow, which has fallen by around 10% in the last year.

Recently, there has been a huge surge of interest in the company's content. No wonder. The company is literally rolling out its content to the competition, and could therefore find itself in the crosshairs of some streaming services that want its content on their platforms

WWE CEO Nick Khan said there is more interest than ever in owning content and intellectual property, and that the company has a unique opportunity to explore a wide range of value-maximizing alternatives.

In the meantime, WWE is exploring a sale of the company, giving the stock significant upside potential as an acquisition target. Even if a sale doesn't happen, WWE is attractive in its own right as it achieves record results and finds new international success. If WWE ultimately decides to sell, there is no shortage of suitors. Viewership of WWE sites such as Smackdown and Raw have grown by 6% and 2%, respectively, at a time when overall TV viewership has declined 18% year-over-year. This makes WWE and its large fan base incredibly attractive to legacy media providers.

This brand is not just attractive to older media providers. Large leaders such as Disney $DIS+0.5%, Amazon $AMZN-0.3% or Apple $AAPL+1.3% could also be interested in this brand. This acquisition would allow them to strengthen their content offerings.

The stock isn't cheap after its growth over the past year and now trades at 33 times earnings. However, WWE looks like the type of stock that might be worth paying a premium for. There will likely be a bidding war to acquire the company, which will involve any number of suitors with deep pockets or a price increase for its content rights if no deal is reached.

In addition, the stock is trading at 5 times earnings, which is less than 7 times the revenue Endeavour Group paid for the UFC in 2016, which makes WWE look great from a price to earnings perspective.

Wall Street analysts view this company quite positively. Out of the 7 analysts covering this company, 4 see the stock as a good buy, and 3 see it as a good hold. Collectively, they agree on a price target of $103 per share.

Analyst Expectations.

Whether there is a sell or not, WWE stock continues to look like a long-term winner. The company has plenty of content to attract viewers at a time when various media platforms are fighting over ownership of the rights to compelling content. This could lead to the company being taken over at a premium or continuing to increase profits and revenue as media entities pay more for the rights to its content over time.

WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.

No comments yet
Timeline Tracker Overview