Value
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.4 |
| P/S | 5.3 |
| EV/EBITDA | 2.0 |
| Fwd P/E | 2.7 |
| PEG | 5.3 |
| Analyst target | 6.0 |
- ▸Forward P/E: 41.7x
- ▸PEG: 1.43
TKO · Why this verdict
Why TKO Group Holdings (TKO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew 26% year-over-year with an earnings growth score of 10 out of 10, placing TKO among the fastest-growing companies in its peer group and demonstrating strong top-line momentum in the entertainment sector. Growth breakdown | Year-over-year revenue growth remains above 15% for at least 3 of the next 4 reported quarters. | →Stable |
| CounterHigh revenue growth accompanied by three consecutive earnings misses — with a worst-case surprise of -113.7% — suggests revenue growth is not translating reliably into bottom-line results. | ||
Free cash flow conversion of 367% relative to net income is exceptional and indicates that reported earnings significantly understate the true cash generation of the business, potentially making the stock cheaper than reported income-based metrics suggest. Quality breakdown | Free cash flow margin remains above 15% of revenue over the next 12 months, confirming the cash generation is structural rather than a one-time event. | →Stable |
| CounterA forward price-to-earnings ratio of 43.2x already prices in strong cash generation, limiting the margin of safety even if free cash flow quality remains high. | ||
Three consecutive earnings misses, including a -113.7% surprise in Q4 2025 and a -32.1% miss in the most recent quarter, combined with a -63.6% miss in Q3 2025, indicate that analyst estimates have consistently been set too high relative to actual delivery. Earnings | Beat count reaches at least 2 out of the next 4 quarters and average earnings surprise rises above -10% over the next year. | →Stable |
| CounterThe one beat quarter showed a 77% positive surprise, suggesting the business can substantially outperform in favorable conditions, and the miss pattern may reflect lumpy deal or event timing. | ||
At a forward price-to-earnings ratio of 43.2x in the entertainment sector with 14% short interest and falling on-balance volume, the stock carries meaningful valuation and positioning risk that outweighs the growth premium. Key risks | Short interest falls below 8% within 12 months as the earnings delivery improves and bearish positioning unwinds. | →Stable |
| CounterHigh short interest of 14% creates a potential short-squeeze dynamic where an earnings beat could trigger rapid price appreciation beyond the analyst target. | ||
Revenue grew 26% year-over-year with an earnings growth score of 10 out of 10, placing TKO among the fastest-growing companies in its peer group and demonstrating strong top-line momentum in the entertainment sector.
→StableGrowth breakdown
- Expectation
- Year-over-year revenue growth remains above 15% for at least 3 of the next 4 reported quarters.
CounterHigh revenue growth accompanied by three consecutive earnings misses — with a worst-case surprise of -113.7% — suggests revenue growth is not translating reliably into bottom-line results.
Free cash flow conversion of 367% relative to net income is exceptional and indicates that reported earnings significantly understate the true cash generation of the business, potentially making the stock cheaper than reported income-based metrics suggest.
→StableQuality breakdown
- Expectation
- Free cash flow margin remains above 15% of revenue over the next 12 months, confirming the cash generation is structural rather than a one-time event.
CounterA forward price-to-earnings ratio of 43.2x already prices in strong cash generation, limiting the margin of safety even if free cash flow quality remains high.
Three consecutive earnings misses, including a -113.7% surprise in Q4 2025 and a -32.1% miss in the most recent quarter, combined with a -63.6% miss in Q3 2025, indicate that analyst estimates have consistently been set too high relative to actual delivery.
→StableEarnings
- Expectation
- Beat count reaches at least 2 out of the next 4 quarters and average earnings surprise rises above -10% over the next year.
CounterThe one beat quarter showed a 77% positive surprise, suggesting the business can substantially outperform in favorable conditions, and the miss pattern may reflect lumpy deal or event timing.
At a forward price-to-earnings ratio of 43.2x in the entertainment sector with 14% short interest and falling on-balance volume, the stock carries meaningful valuation and positioning risk that outweighs the growth premium.
→StableKey risks
- Expectation
- Short interest falls below 8% within 12 months as the earnings delivery improves and bearish positioning unwinds.
CounterHigh short interest of 14% creates a potential short-squeeze dynamic where an earnings beat could trigger rapid price appreciation beyond the analyst target.
TrendMatrix Research · core thesis
Engine thesis — one sentence
TKO Group Holdings delivers 26% year-over-year revenue growth and exceptional free cash flow conversion of 367% relative to net income, but a 75% earnings miss rate over the last four quarters and an expensive forward price-to-earnings of 43x limit the conviction in this setup.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.2 |
| ROA | 2.6 |
| Gross margin | 7.8 |
| Op margin | 8.5 |
| Net margin | 2.2 |
| Current ratio | 5.0 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 367% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
9.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 26% YoY
Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 2.4 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+1.4%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 7.7 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 21%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $163,284 (0.000% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.4 |
| quality rank | 5.2 |
| growth rank | 7.4 |
Technical
8.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.9 |
| support resistance | 9.3 |
| 52w position | 7.3 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.4 |
| days to cover | 2.2 |
| volatility | 1.3 |
| put call | 9.2 |
| implied vol | 5.3 |
| beta | 9.3 |
| debt equity | 7.5 |
- ▸High short interest: 15%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.2 |
- ▸Earnings concerns: 1B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.8<4.5
- ASYMMETRY:0.9<1.5@spot
Warning (0)
none
Reward-to-Risk
0.95
Upside
+8.5%
Downside
9.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.8<4.5, ASYMMETRY:0.9<1.5@spot) reinforce the read. Current asymmetry R:R is 0.95 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.5, Technical at 8.5, and Sentiment at 6.9; the weakest are Momentum at 1.8, Catalyst at 2.8, and Peer rank at 3.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.95 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Revenue Growth
Trip ifYear-over-year revenue growth falls below 10% in at least 2 of the next 4 reported quarters, signaling meaningful deceleration from the 26% pace.
- P2Free Cash Flow Quality
Trip ifFree cash flow as a percentage of net income falls below 100%, dropping more than 70% below the current 367% level, confirming cash quality deterioration.
- P3Consecutive Earnings Misses
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, confirming that the pattern of consecutive misses is not resolved.
- P4Expensive Valuation High Short
Trip ifShort interest rises above 18%, exceeding the current 14% by more than 4 percentage points, indicating increased bearish conviction.