WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
NASDAQ:WMG - Nasdaq - US9345502036 - Common Stock - Currency: USD
Taking everything into account, WMG scores 5 out of 10 in our fundamental rating. WMG was compared to 71 industry peers in the Entertainment industry. WMG scores excellent on profitability, but there are concerns on its financial health. WMG has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
WMG had positive earnings in the past year.
In the past year WMG had a positive cash flow from operations.
WMG had positive earnings in 4 of the past 5 years.
Each year in the past 5 years WMG had a positive operating cash flow.
1.2 Ratios
WMG has a Return On Assets of 5.52%. This is amongst the best in the industry. WMG outperforms 83.33% of its industry peers.
WMG has a better Return On Equity (92.66%) than 96.97% of its industry peers.
WMG has a Return On Invested Capital of 12.66%. This is amongst the best in the industry. WMG outperforms 89.39% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WMG is significantly below the industry average of 91.11%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.52% | ||
| ROE | 92.66% | ||
| ROIC | 12.66% |
ROA(3y)5.53%
ROA(5y)2.67%
ROE(3y)192.94%
ROE(5y)N/A
ROIC(3y)12.68%
ROIC(5y)N/A
1.3 Margins
The Profit Margin of WMG (7.96%) is better than 83.33% of its industry peers.
WMG's Profit Margin has improved in the last couple of years.
WMG has a Operating Margin of 13.75%. This is amongst the best in the industry. WMG outperforms 83.33% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
WMG has a Gross Margin (46.89%) which is in line with its industry peers.
WMG's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.75% | ||
| PM (TTM) | 7.96% | ||
| GM | 46.89% |
OM growth 3Y9.45%
OM growth 5Y13.62%
PM growth 3Y5.66%
PM growth 5Y3.14%
GM growth 3Y-0.34%
GM growth 5Y0.62%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), WMG is creating some value.
Compared to 1 year ago, WMG has more shares outstanding
WMG has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, WMG has an improved debt to assets ratio.
2.2 Solvency
WMG has an Altman-Z score of 1.96. This is not the best score and indicates that WMG is in the grey zone with still only limited risk for bankruptcy at the moment.
WMG has a Altman-Z score of 1.96. This is in the better half of the industry: WMG outperforms 63.64% of its industry peers.
The Debt to FCF ratio of WMG is 7.89, which is on the high side as it means it would take WMG, 7.89 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of WMG (7.89) is better than 65.15% of its industry peers.
WMG has a Debt/Equity ratio of 7.26. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of WMG (7.26) is worse than 80.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.26 | ||
| Debt/FCF | 7.89 | ||
| Altman-Z | 1.96 |
ROIC/WACC1.57
WACC8.06%
2.3 Liquidity
WMG has a Current Ratio of 0.69. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
The Current ratio of WMG (0.69) is worse than 68.18% of its industry peers.
A Quick Ratio of 0.67 indicates that WMG may have some problems paying its short term obligations.
With a Quick ratio value of 0.67, WMG is not doing good in the industry: 68.18% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.69 | ||
| Quick Ratio | 0.67 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 29.17% over the past year.
WMG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.64% yearly.
The Revenue has been growing slightly by 0.75% in the past year.
WMG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.51% yearly.
EPS 1Y (TTM)29.17%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%36.36%
Revenue 1Y (TTM)0.75%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-4.69%
3.2 Future
Based on estimates for the next years, WMG will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.29% on average per year.
WMG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.38% yearly.
EPS Next Y23.5%
EPS Next 2Y15.26%
EPS Next 3Y15.56%
EPS Next 5Y12.29%
Revenue Next Year2.32%
Revenue Next 2Y4.35%
Revenue Next 3Y5.01%
Revenue Next 5Y5.38%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last 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
Based on the Price/Earnings ratio of 28.44, the valuation of WMG can be described as expensive.
71.21% of the companies in the same industry are more expensive than WMG, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 29.63. WMG is around the same levels.
With a Price/Forward Earnings ratio of 23.70, WMG is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 77.27% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of WMG to the average of the S&P500 Index (22.68), we can say WMG is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.44 | ||
| Fwd PE | 23.7 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 62.12% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, WMG is valued a bit cheaper than the industry average as 68.18% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.62 | ||
| EV/EBITDA | 17.99 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
WMG has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as WMG's earnings are expected to grow with 15.56% in the coming years.
PEG (NY)1.21
PEG (5Y)2.67
EPS Next 2Y15.26%
EPS Next 3Y15.56%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.02%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.65, WMG pays a better dividend. On top of this WMG pays more dividend than 92.42% of the companies listed in the same industry.
WMG's Dividend Yield is comparable with the S&P500 average which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.02% |
5.2 History
The dividend of WMG is nicely growing with an annual growth rate of 30.53%!
WMG has been paying a dividend for over 5 years, so it has already some track record.
WMG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)30.53%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
72.48% of the earnings are spent on dividend by WMG. This is not a sustainable payout ratio.
The dividend of WMG is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP72.48%
EPS Next 2Y15.26%
EPS Next 3Y15.56%
35.26
-0.31 (-0.87%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners105.81%
Inst Owner Change-2.1%
Ins Owners1.25%
Ins Owner Change-3.61%
Market Cap18.35B
Analysts73.33
Price Target36.39 (3.2%)
Short Float %6.23%
Short Ratio4.9
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.02% |
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP72.48%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-20.08%
Min EPS beat(2)-71.28%
Max EPS beat(2)31.13%
EPS beat(4)3
Avg EPS beat(4)10.93%
Min EPS beat(4)-71.28%
Max EPS beat(4)65.85%
EPS beat(8)5
Avg EPS beat(8)-0.03%
EPS beat(12)7
Avg EPS beat(12)9.28%
EPS beat(16)9
Avg EPS beat(16)5.65%
Revenue beat(2)1
Avg Revenue beat(2)0.45%
Min Revenue beat(2)-0.54%
Max Revenue beat(2)1.43%
Revenue beat(4)1
Avg Revenue beat(4)-0.22%
Min Revenue beat(4)-1.65%
Max Revenue beat(4)1.43%
Revenue beat(8)4
Avg Revenue beat(8)1.18%
Revenue beat(12)7
Avg Revenue beat(12)1.08%
Revenue beat(16)11
Avg Revenue beat(16)2.27%
PT rev (1m)-1.45%
PT rev (3m)-0.47%
EPS NQ rev (1m)-10%
EPS NQ rev (3m)-13.03%
EPS NY rev (1m)4.53%
EPS NY rev (3m)-2.56%
Revenue NQ rev (1m)-1.34%
Revenue NQ rev (3m)-3.6%
Revenue NY rev (1m)-0.78%
Revenue NY rev (3m)-2.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.44 | ||
| Fwd PE | 23.7 | ||
| P/S | 2.89 | ||
| P/FCF | 36.62 | ||
| P/OCF | 23.14 | ||
| P/B | 33.67 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.99 |
EPS(TTM)1.24
EY3.52%
EPS(NY)1.49
Fwd EY4.22%
FCF(TTM)0.96
FCFY2.73%
OCF(TTM)1.52
OCFY4.32%
SpS12.19
BVpS1.05
TBVpS-7.58
PEG (NY)1.21
PEG (5Y)2.67
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.52% | ||
| ROE | 92.66% | ||
| ROCE | 16.7% | ||
| ROIC | 12.66% | ||
| ROICexc | 14.95% | ||
| ROICexgc | N/A | ||
| OM | 13.75% | ||
| PM (TTM) | 7.96% | ||
| GM | 46.89% | ||
| FCFM | 7.9% |
ROA(3y)5.53%
ROA(5y)2.67%
ROE(3y)192.94%
ROE(5y)N/A
ROIC(3y)12.68%
ROIC(5y)N/A
ROICexc(3y)14.58%
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)16.73%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y7.45%
ROICexc growth 5Y8.97%
OM growth 3Y9.45%
OM growth 5Y13.62%
PM growth 3Y5.66%
PM growth 5Y3.14%
GM growth 3Y-0.34%
GM growth 5Y0.62%
F-Score5
Asset Turnover0.69
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.26 | ||
| Debt/FCF | 7.89 | ||
| Debt/EBITDA | 3.28 | ||
| Cap/Depr | 87.95% | ||
| Cap/Sales | 4.6% | ||
| Interest Coverage | 5.19 | ||
| Cash Conversion | 65.86% | ||
| Profit Quality | 99.21% | ||
| Current Ratio | 0.69 | ||
| Quick Ratio | 0.67 | ||
| Altman-Z | 1.96 |
F-Score5
WACC8.06%
ROIC/WACC1.57
Cap/Depr(3y)87.14%
Cap/Depr(5y)99.38%
Cap/Sales(3y)4.74%
Cap/Sales(5y)5.57%
Profit Quality(3y)95.6%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)29.17%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%36.36%
EPS Next Y23.5%
EPS Next 2Y15.26%
EPS Next 3Y15.56%
EPS Next 5Y12.29%
Revenue 1Y (TTM)0.75%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-4.69%
Revenue Next Year2.32%
Revenue Next 2Y4.35%
Revenue Next 3Y5.01%
Revenue Next 5Y5.38%
EBIT growth 1Y-3.33%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year46.66%
EBIT Next 3Y20.9%
EBIT Next 5Y14.92%
FCF growth 1Y-21.84%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y-3.53%
OCF growth 3Y5.73%
OCF growth 5Y13.52%