UNIVERSAL MUSIC GROUP NV (UMG.AS) Stock Fundamental Analysis
Europe - Euronext Amsterdam - AMS:UMG - NL0015000IY2 - Common Stock
21.08 EUR
+0.26 (+1.25%)
UMG gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 48 industry peers in the Entertainment industry. UMG scores excellent on profitability, but there are concerns on its financial health. UMG is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
- UMG had positive earnings in the past year.
- UMG had a positive operating cash flow in the past year.
- Each year in the past 5 years UMG has been profitable.
- UMG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- With an excellent Return On Assets value of 11.40%, UMG belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
- UMG has a Return On Equity of 42.77%. This is amongst the best in the industry. UMG outperforms 93.75% of its industry peers.
- UMG has a Return On Invested Capital of 11.64%. This is amongst the best in the industry. UMG outperforms 85.42% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for UMG is significantly above the industry average of 9.05%.
- 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 89.58% of its industry peers.
- In the last couple of years the Profit Margin of UMG has grown nicely.
- The Operating Margin of UMG (15.00%) is better than 87.50% of its industry peers.
- In the last couple of years the Operating Margin of UMG has remained more or less at the same level.
- The Gross Margin of UMG (42.99%) is worse than 62.50% of its industry peers.
- In the last couple of years the Gross Margin of UMG has declined.
| 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.
- UMG has more shares outstanding than it did 1 year ago.
- UMG has more shares outstanding than it did 5 years ago.
- 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 worse Altman-Z score (0.32) than 66.67% 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 Debt to FCF ratio of 2.22. This is in the better half of the industry: UMG outperforms 72.92% 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 58.33% 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
- UMG has a Current 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.
- UMG's Current ratio of 0.63 is on the low side compared to the rest of the industry. UMG is outperformed by 66.67% 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.
- With a Quick ratio value of 0.60, UMG is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
- UMG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 66.18%, which is quite impressive.
- The Earnings Per Share has been growing by 15.91% on average over the past years. This is quite good.
- 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.
- Based on estimates for the next years, UMG will show a small growth in Revenue. The Revenue will grow by 5.97% on average per year.
EPS Next Y9.81%
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
- 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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 18.65, which indicates a rather expensive current valuation of UMG.
- Based on the Price/Earnings ratio, UMG is valued cheaply inside the industry as 85.42% of the companies are valued more expensively.
- The average S&P500 Price/Earnings ratio is at 27.21. UMG is valued slightly cheaper when compared to this.
- UMG is valuated rather expensively with a Price/Forward Earnings ratio of 19.05.
- 75.00% of the companies in the same industry are more expensive than UMG, based on the Price/Forward Earnings ratio.
- The average S&P500 Price/Forward Earnings ratio is at 24.26. UMG is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.65 | ||
| Fwd PE | 19.05 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of UMG is on the same level as its industry peers.
- UMG's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.96 | ||
| EV/EBITDA | 18.93 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of UMG may justify a higher PE ratio.
PEG (NY)1.9
PEG (5Y)1.17
EPS Next 2Y9.92%
EPS Next 3Y9.96%
5. Dividend
5.1 Amount
- UMG has a Yearly Dividend Yield of 2.38%.
- UMG's Dividend Yield is rather good when compared to the industry average which is at 0.78. UMG pays more dividend than 93.75% 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 | 2.38% |
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 4 / 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 18.65 and the Price/Book (PB) ratio is 7.93.
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%.