TKO Group Holdings, Inc. (TKO) — DCF Valuation

Discounted Cash Flow intrinsic value with Bear, Base & Bull scenarios

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TKO Group Holdings, Inc. (TKO)

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Intrinsic Value (DCF)

Current$223.87

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Intrinsic$216.92

-3%

$142.39$216.92$358.34

Market implies 26% growth for 5 years

Growth 25%

Discount 10%

Terminal 3%

TKO appears fairly valued — current price aligns with our DCF estimate.

At $224, the market prices in continued strong cash flow growth (26%) — likely reflecting buybacks, margin stability, and ecosystem strength.

Range: Bear $142 → Bull $358. Current price implies expectations near the base case.

Discount ↓Growth →	21%	23%	25%	27%
8%	$271	$294	$318	$345
10%	$184	$200	$217	$235
12%	$137	$148	$161	$174
14%	$106	$116	$125	$136

Bull Case

Bull case ($358) offers 60% upside at 30% growth, 9% discount

Bear Case

Bear case ($142) implies 36% downside at 20% growth, 12% discount
Using 25% growth — aggressive, watch for mean reversion

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5-Year Free Cash Flow Projection

Year 1$1.61B

Year 2$2.01B

Year 3$2.51B

Year 4$3.14B

Year 5$3.92B

Terminal$57.73B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Free Cash Flow$1.29BTTM actual

Bear g×0.8, r+2%

Base Historical CAGR

Bull g×1.2, r−1.5%

ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is TKO stock undervalued or overvalued?

🔴 OVERVALUED

TKO trades at $223.87 vs. our DCF-derived intrinsic value of $72.00, implying -64% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($115.89) suggests limited upside.

What is TKO's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.29B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.23B net debt and dividing by 0.19B shares: Bear $42.20 | Base $72.00 | Bull $115.89. Current price $223.87 implies -64% to base case.

How is TKO's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($17.24B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 13.4x.

Our Methodology

Institutional-grade research documentation

DCF Intrinsic Value Methodology

Eligibility gates, reinvestor-aware FCF normalization, WACC logic, and sensitivity analysis.

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TKO Group Holdings, Inc. (TKO) — DCF Valuation