Long-established in the Media - Diversified industry, Sphere Entertainment Co (SPHR, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 9.71%, juxtaposed with a three-month change of 49.43%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Sphere Entertainment Co.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 3/10
- Growth rank: 1/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Sphere Entertainment Co the GF Score of 52 out of 100, which signals poor future outperformance potential.
Introducing Sphere Entertainment Co
Sphere Entertainment Co is a live entertainment and media company with a market cap of $1.41 billion. The firm creates, writes, casts, produces, and tours shows and events. The company's portfolio includes Sphere, a next-generation entertainment medium to the world. The group has three reportable segments which include Entertainment, MSG Networks, and Tao Group Hospitality. With sales of $841.05 million, the company has an operating margin of -28.12%.
Financial Strength Analysis
Sphere Entertainment Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 617 companies in the Media - Diversified industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 0.73, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.1 indicates a struggle in handling existing debt levels.
Profitability Analysis
Sphere Entertainment Co's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-406,196.00%)), as shown by the following data: 2019: -4.35; 2020: 6.98; 2021: 11.21; 2022: -25.01; 2023: -43.78; .
Growth Prospects
A lack of significant growth is another area where Sphere Entertainment Co seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -26.3 per year over the past three years, which underperforms worse than 88.24% of 944 companies in the Media - Diversified industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Sphere Entertainment Co has a commendable history, the current indicators suggest that it may struggle to maintain its performance in the future. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
