MADISON SQUARE GARDEN ENTERTAINMENT CORP. (MSGE): what the price requires
At today's price, MADISON SQUARE GARDEN ENTERTAINMENT CORP. (MSGE) is priced for +20.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MSGE
Headline
| Field | Value |
|---|---|
| Ticker | MSGE |
| Company | MADISON SQUARE GARDEN ENTERTAINMENT CORP. |
| Current price | $75.29/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.1% |
| Operating margin today | 16.0% |
| Margin compression implied | -11.9pp |
| Implied growth | 20.0% |
| Multiple paid | 25x operating income |
The operating-margin requirement is derived from the framework's value band at year 6, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.7pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| cohort percentile (of 32 peers) | 56 |
| sustained it ~5 years at this level | 37% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.45x | 4 | expensive |
| Earnings | 3.20x | 4 | expensive |
| Relative | 2.28x | 3 | expensive |
| Growth | 0.87x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.1%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $146.75 | 0.51x | yes | FCF base $0.3B, growth 3% (input: historical growth), terminal g 2.8%, WACC 7.1%, 5yr projection |
| DCF Exit Multiple | Growth | $86.16 | 0.87x | yes | Exit EV/EBITDA: 22.7x / 24.7x / 26.7x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $33.07 | 2.28x | yes | P/E 30.8x (blended: static sector reference 14x + trailing (TTM) 74x), scenarios: 26.0x / 30.8x / 35.6x (bear / base = reference held flat / bull), EV/EBITDA 13.71x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $11.00 | 6.84x | yes | BV/sh $1.00, ROE (TTM) 102.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $79.21 | 0.95x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $53.54 | 1.41x | yes | Rev $1.0B, growth 3% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.6x / 4.1x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $15.18 | 4.96x | yes | Normalized EBIT (4y avg op income, one-time charges added back) $0.14B × (1−21%) / WACC 7.1% → EPV (no growth) |
| Residual Income | Asset | $18.60 | 4.05x | yes | BV $1.00 + 5yr PV of (ROE (TTM) 102.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $4.81 | 15.65x | yes | √(22.5 × EPS $1.03 × BVPS $1.00) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $16.02 | 4.70x | yes | EBITDA $0.18B × sector EV/EBITDA 9.0x |
| FCF Yield | Earnings | $58.65 | 1.28x | yes | FCF $341.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $51.94 | 1.45x | yes | SBC-adj FCF $0.31B (FCF $0.34B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $0.86 | 87.54x | yes | EPS $1.03 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $0.20 | 376.42x | yes | BV $1.00 × (ROIC 1.4% / WACC 7.1%) (excluded from median) |
| P/Sales Sector | Relative | $42.33 | 1.78x | yes | Revenue $1.02B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $11.14 | 6.76x | yes | EPS $1.03 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $254.8m |
| Net debt / NOPAT (after-tax) | 1.82x |
| Net debt / operating income (pre-tax) | 1.44x |
| Interest coverage | 4.2x |
| Share count CAGR (buyback) | -2.1% |
| Burning cash | no |
Bullet Takeaways
- MSG Entertainment owns and operates a small set of irreplaceable venues anchored by Madison Square Garden, and its principal revenue stream is leasing and live events the 10-K describes as the business's "principal revenue stream".
- The biggest risk is that the price already pays roughly 24x operating income, a multiple that needs years of high-teens operating-income growth from a venue business whose Q3 operating income just fell 41% year over year.
- Watch concert booking pace into fiscal 2027, where management has flagged strong pacing, and the next venue-utilization print for whether the volume converts to operating leverage rather than higher operating costs.
Bull Case
Look at where revenue has been heading and the bull case starts to take shape. Over the nine months ended March 2026, MSG Entertainment generated $864.5 million in revenue, up 10% from the prior-year period, with adjusted operating income rising to $243.5 million from $223.8 million. The most recent quarter was driven by a higher count of concerts at the Madison Square Garden arena and the close of another record Christmas Spectacular run. This is a business whose revenue grows by putting more events through a fixed set of buildings, and the recent direction is up.
The asset itself is the moat. The company operates a handful of venues that cannot be replicated, and the economics flow from leasing those buildings and selling the experiences inside them. The 10-K explains that leasing "is the Company's principal revenue stream", with direct operating expenses consisting mainly of venue operations and infrastructure. Concessions add another layer: the company generates catering revenue from suites at the Garden and shares food-and-beverage economics with the adjacent sports tenant under arena license agreements. A scarce, marquee venue in the largest U.S. media market is the kind of property that holds pricing power across cycles, because the supply of comparable buildings does not expand.
The forward book supports the growth case. Management has pointed to strong pacing for concert bookings extending into fiscal 2027, which matters for a venue business because the calendar drives the revenue. Free cash flow is real, at $341 million on a trailing basis, and the share count has been shrinking at roughly 2% a year, so the per-share claim on that cash flow is rising even before any growth in the underlying business. The bull case is not that MSGE is cheap on today's earnings; it plainly is not. It is that a one-of-a-kind venue portfolio with a filling event calendar can grow into the multiple the market is already paying.
Bear Case
The bear case rests on what the price assumes the future will deliver. At roughly 24x operating income, the price embeds company-wide operating growth of about 18.8% a year for five years. That is the specific bet a buyer makes here, and it is a demanding one for a venue business. Of comparable fast-growers, only about 39% have historically sustained that pace for five years. The number that should give a buyer pause is the most recent one: Q3 fiscal 2026 operating income was $16.1 million, down 41% from $27.3 million a year earlier, even as revenue edged up 2%. Revenue rose while operating income fell sharply, which is the opposite of the operating leverage the price requires. The growth assumption baked into the multiple and the demonstrated trajectory point in different directions.
The most fragile assumption is that event volume converts cleanly to profit. Venue economics are heavy on fixed and infrastructure cost; the 10-K notes that leasing direct operating expenses "materially consist of venue operations and infrastructure costs", which means a quarter of more concerts can still produce less operating income if the cost of staging them rises faster than the revenue they bring. The Christmas Spectacular is a concentrated, seasonal driver, and a record run is by definition hard to repeat. Concert lineups carry near-term uncertainty even with strong pacing, because the calendar depends on touring artists the company does not control.
The balance sheet adds a second constraint. MSGE carries $578 million of gross debt against $323 million of liquid assets, a net debt position of about $255 million, with interest covered only 2.9 times by operating income. The 10-K is direct that weaker results could heighten risks "relating to our liquidity, indebtedness and our ability to comply with the covenants" in its debt agreements, and it notes the company "does not own all of our venues", so part of the moat sits on leases rather than deeds. None of the static valuation lenses reach the price: the asset-value, earnings-power, and peer-multiple families all read the stock as richly valued, and only the growth-DCF gets there, and only by assuming today's high multiple holds. The bet is durability the conservative methods structurally will not underwrite, against an income statement that just moved the wrong way.
Valuation
Start with what the price is paying for. At $73 (June 27, 2026), the market values MSG Entertainment at roughly 24x operating income, which inverts into an embedded assumption of about 18.8% company-wide operating-income growth a year for five years. Run that against history and only about 39% of comparable fast-growers sustained such a pace over five years. The label on the embedded bet is within range rather than extreme, but it sits at the demanding end of plausible for a venue business that grows event by event in a fixed footprint.
The disagreement among the valuation methods is stark, and it all points one way. Group them into families and three of the four say the price is rich. The asset-value lens lands far below the price, weighed down by a thin book value and methods like Graham Number that anchor to it. The earnings-power lens, which values the business on normalized profit with no growth, lands near $15 on Earnings Power Value, built on four-year-average operating income capitalized at the cost of capital. The peer-multiple lens lands below the price too, with EV/EBITDA Relative around $16 at a 9x sector multiple. Only the cash-flow methods reach $73, and they do so by holding today's roughly 24x exit EBITDA multiple flat for the life of the forecast. That is the whole valuation in one sentence: every static method says expensive, and the price survives only on an assumption of continued growth.
The peer set is itself a tell about how to read the multiple. The cohort here spans Vail Resorts, Churchill Downs, and OneSpaWorld, experience-and-venue operators rather than traditional media, and a single sector P/E is the wrong lens for a scarce-asset business. Solvency is where the caution sharpens: net debt of about $255 million and interest coverage of 2.9 times leave less cushion than a high-multiple stock usually carries, and the 10-K is explicit that the company does not own all its venues. Free cash flow of $341 million is the real anchor under the price, and the shrinking share count steadily concentrates the claim on it. But the cash flow has to grow to justify the multiple, and the most recent operating-income print moved against that requirement.
Catalysts
The most recent print set the near-term tone. For the fiscal third quarter ended March 31, 2026, reported May 7, MSG Entertainment posted revenue of $246.3 million, up 2%, but operating income of $16.1 million, down 41% from $27.3 million a year earlier. The quarter featured a higher count of concerts at the Madison Square Garden arena and the final performances of a record-setting Christmas Spectacular run. The revenue-up, operating-income-down pattern is the single most important recent development, because it cuts directly against the growth the price assumes.
The nine-month picture is steadier. Through March 2026, revenue reached $864.5 million, up 10%, with operating income of $150.2 million slightly ahead of the prior year and adjusted operating income up to $243.5 million. The forward signal is concert booking pace, which management has described as strong into fiscal 2027, though commentary has noted near-term uncertainty around specific lineups. That booking calendar is the next real catalyst: a venue business lives and dies on what fills the dates.
The next fiscal fourth-quarter results, expected in the late summer, will close out the fiscal year and test whether the strong revenue pacing translates into the operating leverage the most recent quarter lacked. That print, and the early read on the fiscal 2027 event calendar, are what move the fundamental story from here.
Peer Cohorts (Per Segment, With Filing Citations)
MSG Entertainment (live entertainment / venues) (reported)
- LYV (LIVE NATION ENTERTAINMENT, INC.)
- (no filing in the citation store)
- TKO (TKO GROUP HOLDINGS, INC.)
- (no filing in the citation store)
- CHDN (Churchill Downs Inc)
- (no filing in the citation store)
- CNK (Cinemark Holdings, Inc.)
- (no filing in the citation store)
- PRKS (United Parks & Resorts Inc.)
- (no filing in the citation store)
- FUN (Six Flags Entertainment Corporation/NEW)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
MSG Entertainment Q3 FY2026 results, May 7, 2026 · MSGE FY2025 10-K