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Madison Square Strong on Buyouts & Entertainment Business

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The Madison Square Garden Company’s (MSG - Free Report) strong brand presence, innovation in operations and continual expansion through acquisitions and partnerships bode well. As a result, the company’s stock has risen 21.2% in the past year against the industry’s 3.4% fall.


Key Catalysts

The maintenance of iconic venues in top live entertainment markets and legendary sports franchises is boosting the company’s brand presence. Madison Square expects to tread on growth trajectory, driven by its first-class operations, innovation and ability to deliver top-class experience to guests.

Another vital growth driver for the company is its operational expertise. Backed by its success in multi-night events, it witnessed double-digit sponsorship and signage growth in 2018. It is also focussing on optimum utilization of its proficiency in areas of marketing partnerships and media rights to add value to its core operational team.

The company renewed a few partnership agreements and signed a tie-up with Squarespace, who would sponsor the first ever Knicks Jersey. The company also announced a multifaceted partnership with PepsiCo, which has become its official signature food and beverage partner. Also, a line-up of multiple shows by Tedeschi Trucks Band throughout 2022 is anticipated to drive revenues from ticket sales.

Apart from its strong brand presence, Madison Square’s entertainment business continues to gain from innovative venues and an overall positive concert market. The company’s entertainment business had been strong throughout 2018. In the second quarter of fiscal 2019, the segment’s revenues rose 17% on a year-over-year basis driven by higher overall event-related revenues and Christmas Spectacular Starring the Radio City Rockettes production revenues. Moreover, increase in sponsorship, signage and suite license fee revenues contributed to the revenue upside.

In a bid to strengthen its footprint and explore additional opportunities, Madison Square continues asset building through partnerships and acquisitions. The company’s majority stake in TAO has enabled to grow its portfolio from 19 to 26 venues. Being its primary strategy, venue expansion allows the company’s marketing partners to showcase brands in powerful and innovative ways, by leveraging the venue's unique platform. In the fiscal third quarter, management announced that it will acquire a space in London to build another "Sphere" with the intent of transforming music/event scenario. This new venue is expected to open in 2021, following a Las Vegas venue in 2020.

Backed by such positives, the Zacks Consensus Estimate for earnings in 2020 is pegged at $1.43, suggesting 164.8% growth from the year-ago quarter.

Zacks Rank & Other Stocks to Consider

Madison Square currently sport a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks that warrant a look in the same space include Lindblad Expeditions Holdings Inc. (LIND - Free Report) , Live Nation Entertainment, Inc. (LYV - Free Report) and Planet Fitness, Inc. (PLNT - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Lindblad Expeditions has an expected earnings growth rate of 83.3% for 2019.

Live Nation Entertainment has a projected earnings growth rate of 588.9% for 2019.

Planet Fitness has an expected earnings growth rate of 26.2% for 2019.

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