Episode Details

Madison Square Garden Entertainment (MSGE) Q4 FY2026 — Fiscal Q4 and full-year FY2026 (year ended June 30; the Item 2.02 8-K cleared EDGAR at 08:09 ET Wednesday August 12, BEFORE the open - so the reaction session is August 12 itself, up 11.40 pct to USD88.42, the highest close of the year, then back to USD85.44 by August 14.) MSG Entertainment reported the best year in its history - revenue of USD1.06B up 13 pct, adjusted operating income of USD262.2M up 18 pct, diluted earnings of USD1.38 against USD0.77 - and did all of it without adding a single seat. It owns or leases the same five rooms it owned a year ago, so every dollar of the USD118.1M increase came from price, yield or a fuller calendar. At USD85.44 the market pays 16.5x adjusted operating income against 7.6x at last August's low. We rate MSGE REDUCE, 4/5, fair value USD60. THE CALL: REDUCE (4/5, HIGH - AN EXCELLENT YEAR, ALREADY PAID FOR TWICE OVER) — base-case value ~$60.00 vs ~$85.44 today. KEY METRICS: - CALL: REDUCE, 4/5. Fair value USD60 against the USD85.44 close, -29.8 pct. Four independent methods converge: a ten-year DCF on owner earnings gives USD57, 12.5x EV to adjusted operating income USD63, 27x the Street's FY2027 estimate USD63, owner earnings capitalised at 3.5 pct USD54. Not one reaches the market price. - THE ANGLE - NO SECOND GARDEN: revenue rose 13 pct to a record USD1.06B with ZERO new venues and ZERO new seats. The same five rooms - The Garden, Radio City, the Beacon, the Chicago Theatre, the Infosys Theater - seat 2,800 to 21,000, and that is fixed. All growth is price, yield or calendar density. - THE FY2026 BRIDGE: entertainment revenue rose USD97.8M - concerts USD33.4M, Christmas Spectacular USD20.9M, the MSG Sports arena-licence split USD17.5M, other live events USD13.2M, sponsorship and suites USD10.9M. The 10-K notes the concert gain was partly offset by FEWER concerts at the theatres. - THE PRINT: FY2026 revenue USD1,060.8M up 12.5 pct; operating income USD141.5M up 15.9 pct; adjusted operating income USD262.2M up 17.8 pct on a 24.7 pct margin; net income USD66.2M up 76.8 pct; diluted EPS USD1.38 vs USD0.77. Fiscal Q4 revenue USD196.3M up 27 pct on an operating LOSS of USD8.6M. - THE CASH IS HALF TIMING: operating cash flow tripled to USD351.4M, but USD180.8M of it - 51 pct - is working capital, mostly USD126.0M of accrued liabilities the 10-K ties to promoter event-settlement timing. Strip every working-capital line and cash generation was USD170.6M vs USD159.2M, up 7 pct. - CONCENTRATION AND TAX: one 92-year-old Christmas show is 18 pct of annual revenue, grown by 15 extra performances and higher ticket yield in the same 6,000-seat hall. The effective tax rate is 38 pct - 21 points federal, 16 New York State and City, 4 of disallowed pay - so MSGE keeps 62 cents per pre-tax dollar. - WHAT MANAGEMENT DID: MSGE repurchased 623,271 Class A shares in FY2026 for about USD25M, an average of USD40.11. It bought NOTHING in the June quarter and left USD44.8M of authority unused at USD85.44. Net debt is USD285M, just 1.09x adjusted operating income against a 3.50x covenant. The balance sheet is not the issue. What to watch: UP: management restarts the buyback here - it bought 623,271 shares in FY2026 at an average of USD40.11, none at all in the June quarter, and USD44.8M of authority sits unused. DOWN: the September quarter, reported early November, decelerates toward the low single digits the Street already models, and 16.5x compresses toward the 12.4x 200-day average. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.