TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
NYSE:TME - New York Stock Exchange, Inc. - US88034P1093 - ADR - Currency: USD
TME gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 71 industry peers in the Entertainment industry. TME scores excellent points on both the profitability and health parts. This is a solid base for a good stock. TME has a correct valuation and a medium growth rate. With these ratings, TME could be worth investigating further for 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.
In the past 5 years TME always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of TME (6.77%) is better than 84.85% of its industry peers.
With an excellent Return On Equity value of 9.11%, TME belongs to the best of the industry, outperforming 80.30% of the companies in the same industry.
The Return On Invested Capital of TME (7.48%) is better than 78.79% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TME is significantly below the industry average of 91.11%.
The last Return On Invested Capital (7.48%) for TME is above the 3 year average (5.26%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.77% | ||
| ROE | 9.11% | ||
| ROIC | 7.48% |
ROA(3y)5.5%
ROA(5y)6.03%
ROE(3y)7.49%
ROE(5y)7.91%
ROIC(3y)5.26%
ROIC(5y)5.81%
1.3 Margins
TME's Profit Margin of 20.37% is amongst the best of the industry. TME outperforms 92.42% of its industry peers.
In the last couple of years the Profit Margin of TME has grown nicely.
TME has a Operating Margin of 21.71%. This is amongst the best in the industry. TME outperforms 92.42% of its industry peers.
TME's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 39.30%, TME is doing worse than 62.12% of the companies in the same industry.
TME's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.71% | ||
| PM (TTM) | 20.37% | ||
| GM | 39.3% |
OM growth 3Y10.43%
OM growth 5Y-0.23%
PM growth 3Y7.55%
PM growth 5Y12.92%
GM growth 3Y3.42%
GM growth 5Y-1.64%
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 about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, TME has more shares outstanding
TME has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.82 indicates that TME is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.82, TME belongs to the top of the industry, outperforming 92.42% of the companies in the same industry.
The Debt to FCF ratio of TME is 0.67, which is an excellent value as it means it would take TME, only 0.67 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TME (0.67) is better than 84.85% of its industry peers.
A Debt/Equity ratio of 0.10 indicates that TME is not too dependend on debt financing.
The Debt to Equity ratio of TME (0.10) is better than 69.70% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.1 | ||
| Debt/FCF | 0.67 | ||
| Altman-Z | 5.82 |
ROIC/WACC1.01
WACC7.44%
2.3 Liquidity
A Current Ratio of 2.34 indicates that TME has no problem at all paying its short term obligations.
The Current ratio of TME (2.34) is better than 80.30% of its industry peers.
TME has a Quick Ratio of 2.34. This indicates that TME is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of TME (2.34) is better than 80.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.34 | ||
| Quick Ratio | 2.34 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 21.31% over the past year.
Measured over the past years, TME shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.63% on average per year.
The Revenue has decreased by -1.58% in the past year.
The Revenue has been growing slightly by 7.89% on average over the past years.
EPS 1Y (TTM)21.31%
EPS 3Y8.33%
EPS 5Y22.63%
EPS Q2Q%30.34%
Revenue 1Y (TTM)-1.58%
Revenue growth 3Y-1.63%
Revenue growth 5Y7.89%
Sales Q2Q%6.79%
3.2 Future
The Earnings Per Share is expected to grow by 14.54% on average over the next years. This is quite good.
Based on estimates for the next years, TME will show a quite strong growth in Revenue. The Revenue will grow by 8.79% on average per year.
EPS Next Y23.98%
EPS Next 2Y19.96%
EPS Next 3Y17.81%
EPS Next 5Y14.54%
Revenue Next Year2.45%
Revenue Next 2Y5.93%
Revenue Next 3Y7.34%
Revenue Next 5Y8.79%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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 stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 23.57, TME is valued on the expensive side.
Based on the Price/Earnings ratio, TME is valued a bit cheaper than the industry average as 78.79% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of TME to the average of the S&P500 Index (29.63), we can say TME is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 19.34, the valuation of TME can be described as rather expensive.
Based on the Price/Forward Earnings ratio, TME is valued cheaply inside the industry as 83.33% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 22.68. TME is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.57 | ||
| Fwd PE | 19.34 |
4.2 Price Multiples
TME's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. TME is cheaper than 60.61% of the companies in the same industry.
81.82% 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 | 19.49 | ||
| EV/EBITDA | 18.21 |
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.
The decent profitability rating of TME may justify a higher PE ratio.
A more expensive valuation may be justified as TME's earnings are expected to grow with 17.81% in the coming years.
PEG (NY)0.98
PEG (5Y)1.04
EPS Next 2Y19.96%
EPS Next 3Y17.81%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.04%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.65, TME pays a better dividend. On top of this TME pays more dividend than 89.39% of the companies listed in the same industry.
With a Dividend Yield of 1.04, TME pays less dividend than the S&P500 average, which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
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 Years0
Div Non Decr Years0
5.3 Sustainability
DPN/A
EPS Next 2Y19.96%
EPS Next 3Y17.81%
14.38
+1.55 (+12.08%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners57.71%
Inst Owner Change-2.49%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap24.30B
Analysts82.35
Price Target14.65 (1.88%)
Short Float %4.74%
Short Ratio3.07
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.17%
Min EPS beat(2)0.34%
Max EPS beat(2)5.99%
EPS beat(4)4
Avg EPS beat(4)1.96%
Min EPS beat(4)0.03%
Max EPS beat(4)5.99%
EPS beat(8)7
Avg EPS beat(8)4.74%
EPS beat(12)10
Avg EPS beat(12)6.21%
EPS beat(16)13
Avg EPS beat(16)7.04%
Revenue beat(2)1
Avg Revenue beat(2)0.19%
Min Revenue beat(2)-0.76%
Max Revenue beat(2)1.14%
Revenue beat(4)3
Avg Revenue beat(4)1.32%
Min Revenue beat(4)-0.76%
Max Revenue beat(4)3.14%
Revenue beat(8)6
Avg Revenue beat(8)1.08%
Revenue beat(12)7
Avg Revenue beat(12)0.7%
Revenue beat(16)9
Avg Revenue beat(16)0.35%
PT rev (1m)1.97%
PT rev (3m)3.54%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0%
EPS NY rev (1m)-3.55%
EPS NY rev (3m)-2.91%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)-0.88%
Revenue NY rev (3m)-0.91%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.57 | ||
| Fwd PE | 19.34 | ||
| P/S | 6.44 | ||
| P/FCF | 19.49 | ||
| P/OCF | 19.49 | ||
| P/B | 2.88 | ||
| P/tB | 4.46 | ||
| EV/EBITDA | 18.21 |
EPS(TTM)0.61
EY4.24%
EPS(NY)0.74
Fwd EY5.17%
FCF(TTM)0.74
FCFY5.13%
OCF(TTM)0.74
OCFY5.13%
SpS2.23
BVpS4.99
TBVpS3.22
PEG (NY)0.98
PEG (5Y)1.04
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.77% | ||
| ROE | 9.11% | ||
| ROCE | 8.59% | ||
| ROIC | 7.48% | ||
| ROICexc | 11.59% | ||
| ROICexgc | 22.51% | ||
| OM | 21.71% | ||
| PM (TTM) | 20.37% | ||
| GM | 39.3% | ||
| FCFM | 33.03% |
ROA(3y)5.5%
ROA(5y)6.03%
ROE(3y)7.49%
ROE(5y)7.91%
ROIC(3y)5.26%
ROIC(5y)5.81%
ROICexc(3y)7.47%
ROICexc(5y)9.62%
ROICexgc(3y)17.24%
ROICexgc(5y)38.43%
ROCE(3y)6.04%
ROCE(5y)6.67%
ROICexcg growth 3Y-19.24%
ROICexcg growth 5Y-37.68%
ROICexc growth 3Y-7.88%
ROICexc growth 5Y-10.79%
OM growth 3Y10.43%
OM growth 5Y-0.23%
PM growth 3Y7.55%
PM growth 5Y12.92%
GM growth 3Y3.42%
GM growth 5Y-1.64%
F-Score6
Asset Turnover0.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.1 | ||
| Debt/FCF | 0.67 | ||
| Debt/EBITDA | 0.85 | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 130.19% | ||
| Profit Quality | 162.21% | ||
| Current Ratio | 2.34 | ||
| Quick Ratio | 2.34 | ||
| Altman-Z | 5.82 |
F-Score6
WACC7.44%
ROIC/WACC1.01
Cap/Depr(3y)160.75%
Cap/Depr(5y)118.42%
Cap/Sales(3y)5.58%
Cap/Sales(5y)3.92%
Profit Quality(3y)127.4%
Profit Quality(5y)127.24%
High Growth Momentum
Growth
EPS 1Y (TTM)21.31%
EPS 3Y8.33%
EPS 5Y22.63%
EPS Q2Q%30.34%
EPS Next Y23.98%
EPS Next 2Y19.96%
EPS Next 3Y17.81%
EPS Next 5Y14.54%
Revenue 1Y (TTM)-1.58%
Revenue growth 3Y-1.63%
Revenue growth 5Y7.89%
Sales Q2Q%6.79%
Revenue Next Year2.45%
Revenue Next 2Y5.93%
Revenue Next 3Y7.34%
Revenue Next 5Y8.79%
EBIT growth 1Y35.75%
EBIT growth 3Y8.64%
EBIT growth 5Y7.65%
EBIT Next Year65.06%
EBIT Next 3Y29.68%
EBIT Next 5Y23.34%
FCF growth 1Y47.07%
FCF growth 3Y12.08%
FCF growth 5Y2.38%
OCF growth 1Y47.07%
OCF growth 3Y14.52%
OCF growth 5Y5.43%