UNIVERSAL MUSIC GROUP NV (UMG.AS) Stock Fundamental Analysis
Europe - Euronext Amsterdam - AMS:UMG - NL0015000IY2 - Common Stock
20.71 EUR
-0.12 (-0.58%)
Taking everything into account, UMG scores 5 out of 10 in our fundamental rating. UMG was compared to 46 industry peers in the Entertainment industry. While UMG belongs to the best of the industry regarding profitability, there are concerns on its financial health. UMG has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
- In the past year UMG was profitable.
- UMG had a positive operating cash flow in the past year.
- Each year in the past 5 years UMG has been profitable.
- In the past 5 years UMG always reported a positive cash flow from operatings.
1.2 Ratios
- With an excellent Return On Assets value of 11.40%, UMG belongs to the best of the industry, outperforming 93.48% of the companies in the same industry.
- UMG has a better Return On Equity (42.77%) than 93.48% of its industry peers.
- UMG has a better Return On Invested Capital (11.64%) than 84.78% of its industry peers.
- UMG had an Average Return On Invested Capital over the past 3 years of 17.13%. This is significantly above the industry average of 9.28%.
- The 3 year average ROIC (17.13%) for UMG is well above the current ROIC(11.64%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.4% | ||
| ROE | 42.77% | ||
| ROIC | 11.64% |
ROA(3y)9.46%
ROA(5y)9.51%
ROE(3y)40.62%
ROE(5y)49.82%
ROIC(3y)17.13%
ROIC(5y)16.12%
1.3 Margins
- UMG's Profit Margin of 17.63% is amongst the best of the industry. UMG outperforms 89.13% of its industry peers.
- In the last couple of years the Profit Margin of UMG has grown nicely.
- Looking at the Operating Margin, with a value of 15.00%, UMG belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
- In the last couple of years the Operating Margin of UMG has remained more or less at the same level.
- With a Gross Margin value of 42.99%, UMG is not doing good in the industry: 63.04% of the companies in the same industry are doing better.
- UMG's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15% | ||
| PM (TTM) | 17.63% | ||
| GM | 42.99% |
OM growth 3Y-2.92%
OM growth 5Y0.16%
PM growth 3Y19.16%
PM growth 5Y5.36%
GM growth 3Y-2.09%
GM growth 5Y-1.63%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), UMG is creating value.
- The number of shares outstanding for UMG has been increased compared to 1 year ago.
- Compared to 5 years ago, UMG has more shares outstanding
- Compared to 1 year ago, UMG has an improved debt to assets ratio.
2.2 Solvency
- UMG has an Altman-Z score of 0.32. This is a bad value and indicates that UMG is not financially healthy and even has some risk of bankruptcy.
- UMG has a Altman-Z score of 0.32. This is in the lower half of the industry: UMG underperforms 69.57% of its industry peers.
- The Debt to FCF ratio of UMG is 2.22, which is a good value as it means it would take UMG, 2.22 years of fcf income to pay off all of its debts.
- UMG has a better Debt to FCF ratio (2.22) than 73.91% of its industry peers.
- A Debt/Equity ratio of 0.54 indicates that UMG is somewhat dependend on debt financing.
- With a Debt to Equity ratio value of 0.54, UMG perfoms like the industry average, outperforming 56.52% of the companies in the same industry.
- Although UMG does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 2.22 | ||
| Altman-Z | 0.32 |
ROIC/WACC1.67
WACC6.96%
2.3 Liquidity
- A Current Ratio of 0.63 indicates that UMG may have some problems paying its short term obligations.
- The Current ratio of UMG (0.63) is worse than 65.22% of its industry peers.
- UMG has a Quick Ratio of 0.63. This is a bad value and indicates that UMG is not financially healthy enough and could expect problems in meeting its short term obligations.
- Looking at the Quick ratio, with a value of 0.60, UMG is doing worse than 65.22% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 66.18% over the past year.
- UMG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.91% yearly.
- Looking at the last year, UMG shows a small growth in Revenue. The Revenue has grown by 6.54% in the last year.
- The Revenue has been growing by 10.57% on average over the past years. This is quite good.
EPS 1Y (TTM)66.18%
EPS 3Y32.12%
EPS 5Y15.91%
EPS Q2Q%N/A
Revenue 1Y (TTM)6.54%
Revenue growth 3Y11.64%
Revenue growth 5Y10.57%
Sales Q2Q%N/A
3.2 Future
- UMG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.57% yearly.
- The Revenue is expected to grow by 5.97% on average over the next years.
EPS Next Y11.55%
EPS Next 2Y9.92%
EPS Next 3Y9.96%
EPS Next 5Y10.57%
Revenue Next Year5.59%
Revenue Next 2Y6.38%
Revenue Next 3Y6.65%
Revenue Next 5Y5.97%
3.3 Evolution
- Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 18.33 indicates a rather expensive valuation of UMG.
- Compared to the rest of the industry, the Price/Earnings ratio of UMG indicates a rather cheap valuation: UMG is cheaper than 84.78% of the companies listed in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 28.60, UMG is valued a bit cheaper.
- With a Price/Forward Earnings ratio of 18.71, UMG is valued on the expensive side.
- 76.09% of the companies in the same industry are more expensive than UMG, based on the Price/Forward Earnings ratio.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.83, UMG is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.33 | ||
| Fwd PE | 18.71 |
4.2 Price Multiples
- The rest of the industry has a similar Enterprise Value to EBITDA ratio as UMG.
- The rest of the industry has a similar Price/Free Cash Flow ratio as UMG.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.56 | ||
| EV/EBITDA | 18.94 |
4.3 Compensation for Growth
- UMG's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- UMG has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.59
PEG (5Y)1.15
EPS Next 2Y9.92%
EPS Next 3Y9.96%
5. Dividend
5.1 Amount
- UMG has a Yearly Dividend Yield of 2.50%. Purely for dividend investing, there may be better candidates out there.
- UMG's Dividend Yield is rather good when compared to the industry average which is at 0.83. UMG pays more dividend than 91.30% of the companies in the same industry.
- UMG's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.5% |
5.2 History
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years3
5.3 Sustainability
- 44.87% of the earnings are spent on dividend by UMG. This is a bit on the high side, but may be sustainable.
DP44.87%
EPS Next 2Y9.92%
EPS Next 3Y9.96%
UNIVERSAL MUSIC GROUP NV / UMG.AS FAQ
Can you provide the ChartMill fundamental rating for UNIVERSAL MUSIC GROUP NV?
ChartMill assigns a fundamental rating of 5 / 10 to UMG.AS.
What is the valuation status of UNIVERSAL MUSIC GROUP NV (UMG.AS) stock?
ChartMill assigns a valuation rating of 5 / 10 to UNIVERSAL MUSIC GROUP NV (UMG.AS). This can be considered as Fairly Valued.
How profitable is UNIVERSAL MUSIC GROUP NV (UMG.AS) stock?
UNIVERSAL MUSIC GROUP NV (UMG.AS) has a profitability rating of 8 / 10.
Can you provide the PE and PB ratios for UMG stock?
The Price/Earnings (PE) ratio for UNIVERSAL MUSIC GROUP NV (UMG.AS) is 18.33 and the Price/Book (PB) ratio is 7.79.
Is the dividend of UNIVERSAL MUSIC GROUP NV sustainable?
The dividend rating of UNIVERSAL MUSIC GROUP NV (UMG.AS) is 4 / 10 and the dividend payout ratio is 44.87%.