Sector financial performance:

This company, which primarily operates MMA promotions and earns revenue by ticket and concession sales at live MMA events, has been grouped into MMA sector in admission to amusement industry.

It seems that the demand for MMA promotions in US market has not been growing fast in the past three years as indicated by decreased number of promotions held by some typical MMA promoters. Intensive consolidations have happened in this sector. However, competition caused huge uncertainty for some of companies in growth of their revenue and pressure on profitability.

The gross margin, based on typical company’s data, seems to be lower than 15% with more than 175% SG&A as percentage of sales.

The typical price/sales ratio is 1.4.

 

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Company performance:

It seems that the revenue of MMA promotion events of this company has not been increasing in the past two years as indicated by the decreased organic growth.  Its increase in revenue has come from acquisition.

The first three months of fiscal 2018 compared with the same period of 2017

Organic revenue decreased due to fewer events held.

Fiscal 2017 compared with fiscal 2016

Revenue increased due to acquisition after completion of IPO in 2016.

Its gross margin (including direct operating costs and depreciation) has been down from about 33% to 15% of 2018 and SG&A as percentage of sales increased fast as a result of massive acquisitions.

Stock performance

This company is having price/sales ratio of 1.4. We think that its stock is being relatively overvalued.