TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:TME - US88034P1093 - ADR
16.84 USD
+0.8 (+4.99%)
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. An interesting combination arises when we look at growth and value: TME is growing strongly while it also seems undervalued. This makes TME very considerable for value and growth and quality investing!
1. Profitability
1.1 Basic Checks
- TME had positive earnings in the past year.
- In the past year TME had a positive cash flow from operations.
- Each year in the past 5 years TME has been profitable.
- TME had a positive operating cash flow in each of the past 5 years.
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.
- With an excellent Return On Equity value of 15.93%, TME belongs to the best of the industry, outperforming 86.25% of the companies in the same industry.
- 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.
- 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
- TME has a Profit Margin of 34.08%. This is amongst the best in the industry. TME outperforms 100.00% of its industry peers.
- In the last couple of years the Profit Margin of TME has grown nicely.
- TME's Operating Margin of 28.82% is amongst the best of the industry. TME outperforms 96.25% of its industry peers.
- TME's Operating Margin has improved in the last couple of years.
- TME has a Gross Margin (43.90%) which is comparable to the rest of the industry.
- TME's Gross Margin has improved in the last couple of years.
| 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 6.12 indicates that TME is not in any danger for bankruptcy at the moment.
- TME's Altman-Z score of 6.12 is amongst the best of the industry. TME outperforms 85.00% 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.
- Looking at the Debt to FCF ratio, with a value of 0.59, TME belongs to the top 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.
- With a decent Current ratio value of 2.09, TME is doing good in the industry, outperforming 76.25% of the companies in the same industry.
- A Quick Ratio of 2.09 indicates that TME has no problem at all paying its short term obligations.
- TME has a better Quick ratio (2.09) than 76.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
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.
- TME shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.88% yearly.
- TME shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.95%.
- Measured over the past years, TME shows a small growth in Revenue. The Revenue has been growing by 2.23% on average per year.
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
- The Earnings Per Share is expected to grow by 16.91% on average over the next years. This is quite good.
- 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
- 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
- TME is valuated rather expensively with a Price/Earnings ratio of 19.36.
- 83.75% of the companies in the same industry are more expensive than TME, based on the Price/Earnings ratio.
- The average S&P500 Price/Earnings ratio is at 27.30. TME is valued slightly cheaper when compared to this.
- Based on the Price/Forward Earnings ratio of 17.09, the valuation of TME can be described as rather expensive.
- TME's Price/Forward Earnings ratio is rather cheap when compared to the industry. TME is cheaper than 86.25% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 24.32. TME is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.36 | ||
| Fwd PE | 17.09 |
4.2 Price Multiples
- TME's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. TME is cheaper than 71.25% of the companies in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of TME indicates a rather cheap valuation: TME is cheaper than 91.25% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.54 | ||
| EV/EBITDA | 13.56 |
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 16.43% 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%
5. Dividend
5.1 Amount
- TME has a Yearly Dividend Yield of 1.85%.
- The stock price of TME dropped by -29.96% 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%
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 19.36 and the Price/Book (PB) ratio is 2.67.
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.