TME gets a fundamental rating of 8 out of 10. The analysis compared the fundamentals against 80 industry peers in the Entertainment industry. TME has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. TME has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! With these ratings, TME could be worth investigating further for value and growth and quality investing!.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year TME was profitable.
In the past year TME had a positive cash flow from operations.
TME had positive earnings in each of the past 5 years.
In the past 5 years TME always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of TME (11.95%) is better than 91.25% of its industry peers.
The Return On Equity of TME (15.93%) is better than 86.25% of its industry peers.
Looking at the Return On Invested Capital, with a value of 10.39%, TME belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
TME had an Average Return On Invested Capital over the past 3 years of 6.52%. This is below the industry average of 8.74%.
The 3 year average ROIC (6.52%) for TME is below the current ROIC(10.39%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	11.95%
ROE	15.93%
ROIC	10.39%

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

TME's Profit Margin of 34.08% is amongst the best of the industry. TME outperforms 100.00% of its industry peers.
In the last couple of years the Profit Margin of TME has grown nicely.
The Operating Margin of TME (28.82%) is better than 96.25% of its industry peers.
TME's Operating Margin has improved in the last couple of years.
TME's Gross Margin of 43.90% is in line compared to the rest of the industry. TME outperforms 51.25% of its industry peers.
In the last couple of years the Gross Margin of TME has grown nicely.

		Industry Rank	Sector Rank
OM	28.82%
PM (TTM)	34.08%
GM	43.9%

OM growth 3Y43.83%

OM growth 5Y10.87%

PM growth 3Y34.13%

PM growth 5Y8.36%

GM growth 3Y12.05%

GM growth 5Y4.42%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so TME is still creating some value.
TME has less shares outstanding than it did 1 year ago.
TME has less shares outstanding than it did 5 years ago.
The debt/assets ratio for TME has been reduced compared to a year ago.

2.2 Solvency

TME has an Altman-Z score of 6.12. This indicates that TME is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 6.12, TME belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
TME has a debt to FCF ratio of 0.59. This is a very positive value and a sign of high solvency as it would only need 0.59 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.59, TME belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
A Debt/Equity ratio of 0.06 indicates that TME is not too dependend on debt financing.
The Debt to Equity ratio of TME (0.06) is better than 66.25% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.06
Debt/FCF	0.59
Altman-Z	6.12

ROIC/WACC1.12

WACC9.28%

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.
Looking at the Current ratio, with a value of 2.09, TME is in the better half of the industry, outperforming 76.25% of the companies in the same industry.
TME has a Quick Ratio of 2.09. This indicates that TME is financially healthy and has no problem in meeting its short term obligations.
TME's Quick ratio of 2.09 is fine compared to the rest of the industry. TME outperforms 76.25% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.09
Quick Ratio	2.09

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

TME shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 36.04%, which is quite impressive.
The Earnings Per Share has been growing by 10.88% on average over the past years. This is quite good.
The Revenue has grown by 13.95% in the past year. This is quite good.
The Revenue has been growing slightly by 2.23% on average over the past years.

EPS 1Y (TTM)36.04%

EPS 3Y25.91%

EPS 5Y10.88%

EPS Q2Q%32.76%

Revenue 1Y (TTM)13.95%

Revenue growth 3Y-3.13%

Revenue growth 5Y2.23%

Sales Q2Q%20.64%

3.2 Future

TME is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.91% yearly.
TME is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.77% yearly.

EPS Next Y22.26%

EPS Next 2Y18.33%

EPS Next 3Y16.43%

EPS Next 5Y16.91%

Revenue Next Year15.3%

Revenue Next 2Y14.22%

Revenue Next 3Y13.71%

Revenue Next 5Y14.77%

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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 19.31, the valuation of TME can be described as rather expensive.
Based on the Price/Earnings ratio, TME is valued cheaper than 83.75% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.21. TME is valued slightly cheaper when compared to this.
TME is valuated rather expensively with a Price/Forward Earnings ratio of 17.05.
Based on the Price/Forward Earnings ratio, TME is valued cheaply inside the industry as 86.25% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 24.26. TME is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	19.31
Fwd PE	17.05

4.2 Price Multiples

71.25% of the companies in the same industry are more expensive than TME, based on the Enterprise Value to EBITDA ratio.
91.25% of the companies in the same industry are more expensive than TME, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	17.5
EV/EBITDA	13.56

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of TME may justify a higher PE ratio.
TME's earnings are expected to grow with 16.43% in the coming years. This may justify a more expensive valuation.

PEG (NY)0.87

PEG (5Y)1.78

EPS Next 2Y18.33%

EPS Next 3Y16.43%

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5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 1.85%, TME has a reasonable but not impressive dividend return.
The stock price of TME dropped by -26.64% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
Compared to an average industry Dividend Yield of 7.66, TME pays a better dividend. On top of this TME pays more dividend than 88.75% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 1.82, TME has a dividend comparable with the average S&P500 company.

		Industry Rank	Sector Rank
Dividend Yield	1.85%

5.2 History

TME does not have a reliable dividend history as it only pays dividend since a couple or years.

Dividend Growth(5Y)N/A

Div Incr Years1

Div Non Decr Years1

5.3 Sustainability

DPN/A

EPS Next 2Y18.33%

EPS Next 3Y16.43%

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TENCENT MUSIC ENTERTAINM-ADR / TME FAQ

What is the fundamental rating for TME stock?

ChartMill assigns a fundamental rating of 8 / 10 to TME.

What is the valuation status of TENCENT MUSIC ENTERTAINM-ADR (TME) stock?

ChartMill assigns a valuation rating of 7 / 10 to TENCENT MUSIC ENTERTAINM-ADR (TME). This can be considered as Undervalued.

How profitable is TENCENT MUSIC ENTERTAINM-ADR (TME) stock?

TENCENT MUSIC ENTERTAINM-ADR (TME) has a profitability rating of 8 / 10.

What are the PE and PB ratios of TENCENT MUSIC ENTERTAINM-ADR (TME) stock?

The Price/Earnings (PE) ratio for TENCENT MUSIC ENTERTAINM-ADR (TME) is 19.31 and the Price/Book (PB) ratio is 2.66.

What is the expected EPS growth for TENCENT MUSIC ENTERTAINM-ADR (TME) stock?

The Earnings per Share (EPS) of TENCENT MUSIC ENTERTAINM-ADR (TME) is expected to grow by 22.26% in the next year.