TKO GROUP HOLDINGS, INC. (TKO): what the price requires
At today's price, TKO GROUP HOLDINGS, INC. (TKO) is priced for today's economics sustained for ~6.5 years. 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/TKO
Headline
| Field | Value |
|---|---|
| Ticker | TKO |
| Company | TKO GROUP HOLDINGS, INC. |
| Sector / Industry | Communication Services |
| Current price | $181.27/sh |
| Composition | UFC 33% / WWE 37% / IMG 30% |
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 | 7.7% |
| Operating margin today | 18.5% |
| Margin compression implied | -10.8pp |
| Must persist for | 6.5y |
| Multiple paid | 42x operating income |
The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.
Reconcile: at the x-ray's 9.3% required return this reads ~8.5 years; the models below use their own rates.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | -0.52σ |
| cohort percentile (of 32 peers) | 84 |
| sustained it ~6.5 years at this level | 24% |
| 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 | 14.42x | 3 | expensive |
| Earnings | 2.46x | 5 | expensive |
| Relative | 3.48x | 5 | expensive |
| Growth | 0.67x | 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 8.3%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $459.01 | 0.39x | yes | FCF base $2.0B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.3%, 7yr projection |
| DCF Exit Multiple | Growth | $269.25 | 0.67x | yes | Exit EV/EBITDA: 23.8x / 26.8x / 29.8x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $65.35 | 2.77x | yes | P/E 30.8x (blended: static sector reference 14x + trailing (TTM) 156x), scenarios: 24.6x / 30.8x / 37.0x (bear / base = reference held flat / bull), EV/EBITDA 14.34x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $12.57 | 14.42x | yes | BV/sh $43.63, ROE (TTM) 2.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $7.34 | 24.70x | yes | 5yr excess ROE then converge to ke=9.3% (excluded from median) |
| Discounted Future Market Cap | Growth | $263.02 | 0.69x | yes | Rev $5.1B, growth 30% (input: historical growth; tapered), Terminal P/S: 5.6x / 7.0x / 8.4x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $42.95 | 4.22x | yes | EPS $2.68, growth 16% (input: historical EPS growth), PEG=9.73 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $14.24 | 12.73x | yes | Normalized EBIT (3y avg op income, one-time charges added back) $0.70B × (1−21%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $5.41 | 33.51x | yes | BV $43.63 + 5yr PV of (ROE (TTM) 2.7% − Kₑ 9.3%) × BV; BV grows 1.7%/yr (excluded from median) |
| Graham Number | Asset | $51.29 | 3.53x | yes | √(22.5 × EPS $2.68 × BVPS $43.63) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $47.40 | 3.82x | yes | EBITDA $1.46B × sector EV/EBITDA 9.0x |
| FCF Yield | Earnings | $80.63 | 2.25x | yes | FCF $1817.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $73.59 | 2.46x | yes | SBC-adj FCF $1.69B (FCF $1.82B − SBC $0.13B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $86.47 | 2.10x | yes | EPS $2.68 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $11.33 | 16.00x | yes | BV $43.63 × (ROIC 2.1% / WACC 8.3%) |
| P/Sales Sector | Relative | $52.03 | 3.48x | yes | Revenue $5.06B × sector P/S 2.0x |
| PEG Fair Value | Relative | $64.43 | 2.81x | yes | EPS $2.68 × (PEG 1.5 × growth 16.0% (input: historical EPS growth)) → PE 24.0x |
| Earnings Yield | Earnings | $28.97 | 6.26x | yes | EPS $2.68 / 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 | $4.1b |
| Net debt / NOPAT (after-tax) | 5.57x |
| Net debt / operating income (pre-tax) | 4.40x |
| Interest coverage | 4.6x |
| Share count CAGR (dilution) | 6.5% |
| Burning cash | no |
Bullet Takeaways
- TKO owns two of the few sports properties whose rights fees keep resetting upward, and the 10-K names the mechanism directly: "the broader trend of premium live sports and entertainment content rights generally increasing in value across renewal cycles", now crystallized in Paramount's $7.7 billion, seven-year deal for UFC's US rights that began in January 2026.
- The biggest risk is duration: at $184.38 the market pays about 43 times trailing operating income, a multiple at the very top of the peer group, and the price needs roughly six to seven years of ceiling-pace growth that only about 24% of comparable fast-growers have sustained, carried on $4.1 billion of net debt.
- Watch the August 3, 2026 second-quarter report against reaffirmed full-year guidance of $5.675 to $5.775 billion in revenue and $2.24 to $2.29 billion in adjusted EBITDA.
Bull Case
One number does most of the work here: $7.7 billion. That is what Paramount agreed to pay over seven years for UFC's US media rights, a deal that took effect in January 2026 and puts all 13 numbered events and 30 Fight Nights on Paramount+, with select events simulcast on CBS, and has already been extended to Latin America and Australia. The growth today's price demands is, to an unusual degree, already signed: contracted rights fees step up on a schedule rather than depending on quarterly execution. The first quarter with the deal live showed the effect, with UFC revenue of $401.2 million and total company revenue up 26% year over year to $1.60 billion.
WWE is compounding on its own track. First-quarter WWE revenue rose $84.2 million to $475.7 million, adjusted EBITDA rose 32% to $256.1 million, and the segment margin climbed from 50% to 54%. The sponsorship flywheel the 10-K describes for UFC is running in parallel: the filing attributes the segment's 2025 growth primarily to "$62.9 million of higher partnerships revenue from new sponsors and increases in fees from renewals". Scripted and unscripted fight entertainment are both scarce, year-round, live properties in a media market that pays escalating prices for exactly that scarcity, and TKO controls the two biggest.
The cash follows. Free cash flow runs about $1.8 billion on the engine's trailing data, and management has committed to returning it: a $0.79 quarterly dividend (roughly $150 million per quarter) paid June 30, 2026, an additional $1 billion buyback authorization, and about $1 billion of total capital returned in the first quarter alone. Notably, the forward-looking valuation methods land above today's price; even holding the current EV/EBITDA multiple flat for seven years produces a central read comfortably north of $184. The bull's concession is real leverage and a top-of-peer-group multiple; the reply is that few businesses anywhere have this share of their growth already under contract.
Bear Case
TKO sells spectacle, and the market has decided to pay for it as if it were contracted software revenue. The observation matters before any ratio does: underneath the media-rights escalators sits a hits-and-talent business, dependent on star fighters, wrestlers, and event calendars, that must stay culturally central for the better part of a decade for today's price to work. The numbers then quantify the leap: at about 43 times trailing operating income, the price requires operating growth held near its self-funding ceiling for roughly six and a half years, a persistence only about 24% of comparable fast-growers have managed, on a multiple at the very top of the peer distribution.
The deal-driven growth pattern cuts both ways. The 10-K shows what the business looks like between rights resets: total 2025 revenue increased by "$149.0 million, or 3%, to $4,735.2 million", a modest organic year before the Paramount step-up landed. Media-rights growth arrives in vintages; once a seven-year deal is signed, its escalators are known, and the next leg of the thesis needs new properties or new markets to re-rate. Competition for attention is broad and named in the filing itself, which lists "All Elite Wrestling, Impact Wrestling, Ring of Honor, New Japan Pro-Wrestling, and Consejo Mundial de Lucha Libre" among WWE's competitors, plus every other form of entertainment competing for the same evenings. The IMG segment, meanwhile, earns commission revenue on rights it sells for clients, an agency economics layer thinner than owning the properties outright.
The capital structure leaves little room for a soft stretch. Net debt stands at about $4.1 billion, roughly 4.4 times trailing operating income, with interest covered about 4.3 times, and the filing's own risk language flags that the structure could "require us to refinance in order to accommodate the maturity of the term loans under the Credit Facilities in 2031" and "increase our vulnerability to adverse economic and industry conditions". Layer on a share count that has grown about 6.5% a year over the past two and a half years as stock funded the asset buildout, and the per-share math has been fighting dilution even as the company now pays a dividend and buys back shares on top of the debt load. A decade-long duration bet with 4x leverage prices in very few surprises.
Valuation
At $184.38 (July 10, 2026), the market pays roughly 43 times TKO's trailing company-wide operating income. Run backwards at an 8.2% cost of capital, that embeds operating growth near the self-funding ceiling sustained for about six and a half to seven years; each percentage point of growth moves the horizon about two years, so treat the solve as approximate. Two of the reference points sharpen it: the near-term pace is within what TKO has recently delivered, so the bet is persistence rather than acceleration, and the multiple sits at the very top of the peer distribution. Historically, only about 24% of comparable fast-growers sustained the required pace that long.
The methods split into a clean pattern: only the forward-growth family reaches the price. Its central estimate sits about a third above today's level, and even the exit-multiple approach, which simply holds today's roughly 27x EV/EBITDA flat for seven years, lands above $184; the perpetual cash-flow method, fed by the company's 25% historical growth, lands far higher still. Every static family disagrees: earnings-power methods put the price at about 2.5 times their central estimate, peer multiples at about 3.5 times against a 14x sector median P/E and a 9x sector EV/EBITDA, and asset-value methods further still, though that family says more about merger accounting than economics, since the balance sheet carries $43.63 of book value per share earning a measured 2.7% return, mostly acquired intangibles. The informative spread is earnings power and peers versus growth, and it is wide.
The balance sheet is the constraint on error. Net debt of $4.1 billion runs about 4.4 times trailing operating income of $936 million, with interest covered 4.3 times; the company is strongly cash-generative (about $1.8 billion of trailing free cash flow) and not burning, but the share count has expanded about 6.5% a year over the recent window. The price, in short, is a bet that contracted rights escalators plus live-event economics keep operating income compounding at its ceiling well into the 2030s, with the static methods marking how much of that future is already paid for.
Catalysts
The next print is August 3, 2026, with consensus at $1.45 of EPS for the quarter. The first quarter, reported in early May, set a high bar: revenue of $1.597 billion, up 26%, net income of $249.8 million, adjusted EBITDA of $549.8 million, and EPS of $1.12 against a $1.112 consensus. Management reaffirmed full-year 2026 guidance of $5.675 to $5.775 billion in revenue and $2.240 to $2.290 billion in adjusted EBITDA, so the year is now about pacing against those ranges as the Paramount deal's first full seasons play through.
The distribution story keeps widening. Paramount's $7.7 billion, seven-year US rights agreement for UFC went live in January 2026, putting numbered events and Fight Nights on Paramount+ with CBS simulcasts, and the partnership has been expanded to Latin America, including Brazil, and Australia for 2026. International rights renewals and the ramp of the WWE calendar (the first quarter benefited from a Saudi-hosted Royal Rumble) are the incremental revenue events to track.
Capital returns now run on a schedule: a $0.79 quarterly dividend, roughly $150 million per quarter, was paid June 30, 2026, the board added a $1 billion repurchase authorization, and about $1 billion of capital went back to holders in the first quarter. The street remains ahead of the tape, with the average analyst target near $229, effectively an endorsement of the same forward-growth lens that is the only valuation family reaching today's price.
Peer Cohorts (Per Segment, With Filing Citations)
UFC (reported)
- MSGS (MADISON SQUARE GARDEN SPORTS CORP.)
- (no filing in the citation store)
- MSGE (MADISON SQUARE GARDEN ENTERTAINMENT CORP.)
- (no filing in the citation store)
- LYV (LIVE NATION ENTERTAINMENT, INC.)
- (no filing in the citation store)
- FWONA (LIBERTY MEDIA CORPORATION)
- (no filing in the citation store)
- CHDN (Churchill Downs Inc)
- (no filing in the citation store)
- DKNG (DRAFTKINGS INC.)
- (no filing in the citation store)
WWE (reported)
- MSGS (MADISON SQUARE GARDEN SPORTS CORP.)
- (no filing in the citation store)
- MSGE (MADISON SQUARE GARDEN ENTERTAINMENT CORP.)
- (no filing in the citation store)
- LYV (LIVE NATION ENTERTAINMENT, INC.)
- (no filing in the citation store)
- FWONA (LIBERTY MEDIA CORPORATION)
- (no filing in the citation store)
- CHDN (Churchill Downs Inc)
- (no filing in the citation store)
IMG (reported)
- LYV (LIVE NATION ENTERTAINMENT, INC.)
- (no filing in the citation store)
- FWONA (LIBERTY MEDIA CORPORATION)
- (no filing in the citation store)
- MSGE (MADISON SQUARE GARDEN ENTERTAINMENT CORP.)
- (no filing in the citation store)
- CHDN (Churchill Downs Inc)
- (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
Paramount press release; CBS News · TKO Q1 2026 results · Paramount and TKO press releases; CBS News · TKO Q1 2026 results, Yahoo Sports · TKO Q1 2026 results, POST Wrestling · TKO 8-K and Simply Wall St coverage · Public.com earnings calendar · TKO Q1 2026 results, TipRanks · Paramount and TKO press releases · POST Wrestling · TKO 8-K; Simply Wall St · Public.com