The entertainment industry has evolved dramatically over the past few years. The digital entertainment industry witnessed massive growth amid the pandemic, with soaring consumer demand for creative digital content. And the demand is expected to remain strong despite rising prices. According to The Motion Picture Association (MPA), the U.S. entertainment industry reached $36.80 billion in 2021, up 14% year-over-year.
The entertainment industry is expected to thrive given robust consumer demand and the resumption of several halted projects. In addition, according to Statista, over-the-top (OTT) media revenue is projected to reach over $224 billion by 2027, nearly double that of 2021.
Therefore, fundamentally strong stocks in the entertainment industry, Endeavor Group Holdings, Inc. (EDR) and Comcast Corporation (CMCSA) could be ideal additions to one’s portfolio.
Endeavor Group Holdings, Inc. (EDR)
EDR operates as an entertainment, sports, and content company in the United States, the United Kingdom, and internationally. It works in three segments: Owned Sports Properties; Events; Experiences & Rights; and Representation.
On May 12, 2022, Ariel Emanuel, EDR’s CEO, said, “We feel great about where we sit relative to the secular tailwinds across all of our businesses, and we’ve raised our guidance for the fourth quarter in a row to reflect our positive outlook for the balance of the year.”
EDR’s revenue came in at $1.47 billion for the first quarter ended March 31, 2022, up 37.8% year-over-year. Its adjusted net income came in at $129.21 million, up 122.4% year-over-year. Also, its adjusted EBITDA came in at $314.45 million, up 57.6% year-over-year.
Analysts expect EDR’s revenue to increase 5.9% year-over-year to $5.38 billion in 2022. Its EPS is estimated to increase 152.9% to $1.29 in 2022. It surpassed the EPS estimates in three of the trailing four quarters. Over the past month, the stock has gained 5.5% to close yesterday’s trading session at $20.37.
EDR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
EDR has a B grade for Growth and Sentiment. Within the Entertainment - Sports & Theme Parks industry, it is ranked first out of 16 stocks. Click here for the additional POWR Ratings for Value, Momentum, Stability, and Quality for EDR.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide. It operates through Cable Communications; Media; Studios; Theme Parks; and Sky segments. The company connects and streams 57 million customer relationships across the United States and Europe.
On June 7, 2022, Comcast NBCUniversal launched its "Jurassic World Rule Your Future STEAM Initiative," a program aimed at strengthening STEAM preparation and digital skills among low-income and first generation-to-college students. This program stands on a staggering $1.50 million investment and is expected to be a profitable endeavor for the company. It is devoted to bolstering confidence in advanced digital work among underprivileged youth.
For the first quarter ended March 31, 2022, CMCSA’s revenue increased 14% year-over-year to $31.01 billion. Its adjusted net income came in at $3.90 billion, up 10.5% year-over-year, while its adjusted EPS came in at $0.86, up 13.2% year-over-year. Moreover, its adjusted EBITDA came in at $9.15 billion, up 8.8% year-over-year.
CMCSA’s revenue is expected to come in at $122.67 billion in 2022, representing a 5.4% year-over-year rise. The company’s EPS is expected to increase 13.5% per annum for the next five years. It surpassed EPS estimates in each of the four trailing quarters. The stock closed yesterday’s trading session at $40.13.
It’s no surprise that CMCSA has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Stability, and Quality.
Click here to see the additional POWR Ratings for CMCSA (Value, Momentum, and Sentiment). CMCSA is ranked first out of 9 stocks in the Entertainment - TV & Internet Providers industry.
EDR shares were trading at $19.70 per share on Thursday afternoon, down $0.67 (-3.29%). Year-to-date, EDR has declined -43.54%, versus a -22.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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