TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:TME - US88034P1093 - ADR
16.8 USD
+0.76 (+4.74%)
16.791 USD
-0.01 (-0.05%)
Taking everything into account, TME scores 8 out of 10 in our fundamental rating. TME was compared to 80 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 is growing strongly while it also seems undervalued. This is an interesting combination These ratings could make TME a good candidate for value and growth and quality investing.
1. Profitability
1.1 Basic Checks
- TME had positive earnings in the past year.
- TME had a positive operating cash flow in the past year.
- In the past 5 years TME has always been profitable.
- Each year in the past 5 years TME had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 11.95%, TME belongs to the top of the industry, outperforming 91.25% of the companies in the same industry.
- TME's Return On Equity of 15.93% is amongst the best of the industry. TME outperforms 86.25% of its industry peers.
- TME's Return On Invested Capital of 10.39% is amongst the best of the industry. TME outperforms 87.50% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for TME is below the industry average of 8.74%.
- The last Return On Invested Capital (10.39%) for TME is above the 3 year average (6.52%), which is a sign of increasing profitability.
| 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
- Looking at the Profit Margin, with a value of 34.08%, TME belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
- TME's Profit Margin has improved in the last couple of years.
- TME has a Operating Margin of 28.82%. This is amongst the best in the industry. TME outperforms 96.25% of its industry peers.
- In the last couple of years the Operating Margin of TME has grown nicely.
- TME has a Gross Margin (43.90%) which is comparable to the rest of the industry.
- 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%
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.
- 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
- An Altman-Z score of 6.33 indicates that TME is not in any danger for bankruptcy at the moment.
- TME's Altman-Z score of 6.33 is amongst the best of the industry. TME outperforms 87.50% of its industry peers.
- 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.
- The Debt to FCF ratio of TME (0.59) is better than 87.50% of its industry peers.
- A Debt/Equity ratio of 0.06 indicates that TME is not too dependend on debt financing.
- TME's Debt to Equity ratio of 0.06 is fine compared to the rest of the industry. TME outperforms 66.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.59 | ||
| Altman-Z | 6.33 |
ROIC/WACC1.12
WACC9.28%
2.3 Liquidity
- A Current Ratio of 2.09 indicates that TME has no problem at all paying 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.
- Looking at the Quick 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.
| 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 36.04% over the past year.
- Measured over the past years, TME shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.88% on average per year.
- TME shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.95%.
- TME shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.23% yearly.
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
- Based on estimates for the next years, TME will show a quite strong growth in Earnings Per Share. The EPS will grow by 16.91% on average per year.
- 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 Y22.58%
EPS Next 2Y18.33%
EPS Next 3Y16.49%
EPS Next 5Y16.91%
Revenue Next Year15.31%
Revenue Next 2Y14.21%
Revenue Next 3Y13.69%
Revenue Next 5Y14.77%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- 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 19.31, the valuation of TME can be described as rather expensive.
- Based on the Price/Earnings ratio, TME is valued cheaper than 82.50% 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 17.02.
- 85.00% of the companies in the same industry are more expensive than TME, based on the Price/Forward Earnings ratio.
- The average S&P500 Price/Forward Earnings ratio is at 25.98. TME is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.31 | ||
| Fwd PE | 17.02 |
4.2 Price Multiples
- TME's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. TME is cheaper than 70.00% of the companies in the same industry.
- 90.00% 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 | 17.47 | ||
| EV/EBITDA | 14.34 |
4.3 Compensation for Growth
- TME's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- TME has an outstanding profitability rating, which may justify a higher PE ratio.
- TME's earnings are expected to grow with 16.49% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.86
PEG (5Y)1.78
EPS Next 2Y18.33%
EPS Next 3Y16.49%
5. Dividend
5.1 Amount
- TME has a Yearly Dividend Yield of 1.91%. Purely for dividend investing, there may be better candidates out there.
- 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 7.58, TME pays a better dividend. On top of this TME pays more dividend than 88.75% of the companies listed in the same industry.
- TME's Dividend Yield is comparable with the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.91% |
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
DPN/A
EPS Next 2Y18.33%
EPS Next 3Y16.49%
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 22.58% in the next year.