TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
NYSE:TME - New York Stock Exchange, Inc. - US88034P1093 - ADR - Currency: USD
Taking everything into account, TME scores 7 out of 10 in our fundamental rating. TME was compared to 72 industry peers in the Entertainment industry. Both the health and profitability get an excellent rating, making TME a very profitable company, without any liquidiy or solvency issues. TME has a decent growth rate and is not valued too expensively. This makes TME very considerable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year TME was profitable.
TME had a positive operating cash flow in the past year.
In the past 5 years TME has always been profitable.
TME had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
TME has a Return On Assets of 7.35%. This is amongst the best in the industry. TME outperforms 87.50% of its industry peers.
TME has a Return On Equity of 9.79%. This is amongst the best in the industry. TME outperforms 81.94% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.35%, TME belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for TME is significantly below the industry average of 22.90%.
The 3 year average ROIC (6.52%) for TME is below the current ROIC(8.35%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | 9.79% | ||
| ROIC | 8.35% |
ROA(3y)6.45%
ROA(5y)5.99%
ROE(3y)8.75%
ROE(5y)8.04%
ROIC(3y)6.52%
ROIC(5y)5.78%
1.3 Margins
Looking at the Profit Margin, with a value of 23.39%, TME belongs to the top of the industry, outperforming 95.83% of the companies in the same industry.
TME's Profit Margin has improved in the last couple of years.
TME has a better Operating Margin (25.88%) than 94.44% of its industry peers.
In the last couple of years the Operating Margin of TME has grown nicely.
Looking at the Gross Margin, with a value of 42.34%, TME is in line with its industry, outperforming 44.44% of the companies in the same industry.
TME's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.88% | ||
| PM (TTM) | 23.39% | ||
| GM | 42.34% |
OM growth 3Y43.83%
OM growth 5Y10.87%
PM growth 3Y34.13%
PM growth 5Y8.36%
GM growth 3Y12.05%
GM growth 5Y4.42%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), TME is creating some value.
The number of shares outstanding for TME has been reduced compared to 1 year ago.
Compared to 5 years ago, TME has less shares outstanding
The debt/assets ratio for TME has been reduced compared to a year ago.
2.2 Solvency
TME has an Altman-Z score of 7.15. This indicates that TME is financially healthy and has little risk of bankruptcy at the moment.
TME's Altman-Z score of 7.15 is amongst the best of the industry. TME outperforms 90.28% of its industry peers.
TME has a debt to FCF ratio of 0.65. This is a very positive value and a sign of high solvency as it would only need 0.65 years to pay back of all of its debts.
TME has a better Debt to FCF ratio (0.65) than 86.11% of its industry peers.
A Debt/Equity ratio of 0.06 indicates that TME is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.06, TME is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 7.15 |
ROIC/WACC1.2
WACC6.98%
2.3 Liquidity
TME has a Current Ratio of 2.09. This indicates that TME is financially healthy and has no problem in meeting its short term obligations.
TME has a Current ratio of 2.09. This is amongst the best in the industry. TME outperforms 80.56% of its industry peers.
A Quick Ratio of 2.09 indicates that TME has no problem at all paying its short term obligations.
TME has a Quick ratio of 2.09. This is amongst the best in the industry. TME outperforms 80.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 31.39% over the past year.
The Earnings Per Share has been growing by 10.88% on average over the past years. This is quite good.
The Revenue has been growing slightly by 5.35% in the past year.
The Revenue has been growing slightly by 2.23% on average over the past years.
EPS 1Y (TTM)31.39%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%25.69%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
3.2 Future
Based on estimates for the next years, TME will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.58% on average per year.
TME is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.62% yearly.
EPS Next Y13.29%
EPS Next 2Y14.58%
EPS Next 3Y14.97%
EPS Next 5Y14.58%
Revenue Next Year10.52%
Revenue Next 2Y11.17%
Revenue Next 3Y11.04%
Revenue Next 5Y12.62%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 27.03, the valuation of TME can be described as expensive.
Based on the Price/Earnings ratio, TME is valued cheaply inside the industry as 80.56% of the companies are valued more expensively.
TME's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.45.
With a Price/Forward Earnings ratio of 21.62, TME is valued on the expensive side.
76.39% of the companies in the same industry are more expensive than TME, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of TME to the average of the S&P500 Index (21.90), we can say TME is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.03 | ||
| Fwd PE | 21.62 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TME indicates a somewhat cheap valuation: TME is cheaper than 61.11% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TME indicates a somewhat cheap valuation: TME is cheaper than 75.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.24 | ||
| EV/EBITDA | 21.57 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates TME does not grow enough to justify the current Price/Earnings ratio.
TME has an outstanding profitability rating, which may justify a higher PE ratio.
TME's earnings are expected to grow with 14.97% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.03
PEG (5Y)2.48
EPS Next 2Y14.58%
EPS Next 3Y14.97%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.58%. Purely for dividend investing, there may be better candidates out there.
TME's Dividend Yield is rather good when compared to the industry average which is at 6.60. TME pays more dividend than 87.50% of the companies in the same industry.
TME's Dividend Yield is slightly below the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.58% |
5.2 History
TME is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
22.70% of the earnings are spent on dividend by TME. This is a low number and sustainable payout ratio.
DP22.7%
EPS Next 2Y14.58%
EPS Next 3Y14.97%
19.46
+0.29 (+1.51%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners77.07%
Inst Owner Change7.57%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap29.99B
Analysts81.21
Price Target18.68 (-4.01%)
Short Float %6.34%
Short Ratio3.27
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.58% |
Yearly Dividend0.13
Dividend Growth(5Y)N/A
DP22.7%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.87%
Min EPS beat(2)-4.78%
Max EPS beat(2)12.53%
EPS beat(4)3
Avg EPS beat(4)3.52%
Min EPS beat(4)-4.78%
Max EPS beat(4)12.53%
EPS beat(8)6
Avg EPS beat(8)3.05%
EPS beat(12)10
Avg EPS beat(12)4.95%
EPS beat(16)13
Avg EPS beat(16)6.94%
Revenue beat(2)1
Avg Revenue beat(2)-0.08%
Min Revenue beat(2)-1.38%
Max Revenue beat(2)1.21%
Revenue beat(4)2
Avg Revenue beat(4)0.05%
Min Revenue beat(4)-1.38%
Max Revenue beat(4)1.21%
Revenue beat(8)5
Avg Revenue beat(8)0.65%
Revenue beat(12)8
Avg Revenue beat(12)0.9%
Revenue beat(16)9
Avg Revenue beat(16)0.38%
PT rev (1m)13.2%
PT rev (3m)15.13%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.34%
EPS NY rev (1m)-1.01%
EPS NY rev (3m)0.51%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-0.16%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.73%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.03 | ||
| Fwd PE | 21.62 | ||
| P/S | 7.56 | ||
| P/FCF | 23.24 | ||
| P/OCF | 20.9 | ||
| P/B | 3.17 | ||
| P/tB | 4.65 | ||
| EV/EBITDA | 21.57 |
EPS(TTM)0.72
EY3.7%
EPS(NY)0.9
Fwd EY4.62%
FCF(TTM)0.84
FCFY4.3%
OCF(TTM)0.93
OCFY4.78%
SpS2.57
BVpS6.15
TBVpS4.18
PEG (NY)2.03
PEG (5Y)2.48
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | 9.79% | ||
| ROCE | 9.95% | ||
| ROIC | 8.35% | ||
| ROICexc | 13.22% | ||
| ROICexgc | 24.7% | ||
| OM | 25.88% | ||
| PM (TTM) | 23.39% | ||
| GM | 42.34% | ||
| FCFM | 32.54% |
ROA(3y)6.45%
ROA(5y)5.99%
ROE(3y)8.75%
ROE(5y)8.04%
ROIC(3y)6.52%
ROIC(5y)5.78%
ROICexc(3y)9.52%
ROICexc(5y)8.88%
ROICexgc(3y)19.59%
ROICexgc(5y)19.68%
ROCE(3y)7.76%
ROCE(5y)6.88%
ROICexcg growth 3Y16.02%
ROICexcg growth 5Y-26.04%
ROICexc growth 3Y28.21%
ROICexc growth 5Y-2.74%
OM growth 3Y43.83%
OM growth 5Y10.87%
PM growth 3Y34.13%
PM growth 5Y8.36%
GM growth 3Y12.05%
GM growth 5Y4.42%
F-Score7
Asset Turnover0.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Debt/EBITDA | 0.46 | ||
| Cap/Depr | 105.52% | ||
| Cap/Sales | 3.63% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 123.39% | ||
| Profit Quality | 139.12% | ||
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 | ||
| Altman-Z | 7.15 |
F-Score7
WACC6.98%
ROIC/WACC1.2
Cap/Depr(3y)104.08%
Cap/Depr(5y)129.71%
Cap/Sales(3y)3.85%
Cap/Sales(5y)4.42%
Profit Quality(3y)146.47%
Profit Quality(5y)125.36%
High Growth Momentum
Growth
EPS 1Y (TTM)31.39%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%25.69%
EPS Next Y13.29%
EPS Next 2Y14.58%
EPS Next 3Y14.97%
EPS Next 5Y14.58%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
Revenue Next Year10.52%
Revenue Next 2Y11.17%
Revenue Next 3Y11.04%
Revenue Next 5Y12.62%
EBIT growth 1Y53.84%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year40.38%
EBIT Next 3Y20.57%
EBIT Next 5Y19.28%
FCF growth 1Y49.73%
FCF growth 3Y55.02%
FCF growth 5Y9.34%
OCF growth 1Y40.04%
OCF growth 3Y25.17%
OCF growth 5Y10.63%