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WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis

NASDAQ:WMG - Nasdaq - US9345502036 - Common Stock - Currency: USD

29.39  +0.24 (+0.82%)

After market: 29.39 0 (0%)

Fundamental Rating

4

WMG gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 72 industry peers in the Entertainment industry. WMG scores excellent on profitability, but there are concerns on its financial health. WMG is valued correctly, but it does not seem to be growing.


Dividend Valuation Growth Profitability Health

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7

1. Profitability

1.1 Basic Checks

In the past year WMG was profitable.
In the past year WMG had a positive cash flow from operations.
Of the past 5 years WMG 4 years were profitable.
WMG had a positive operating cash flow in each of the past 5 years.
WMG Yearly Net Income VS EBIT VS OCF VS FCFWMG Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 500M

1.2 Ratios

WMG has a better Return On Assets (4.66%) than 81.94% of its industry peers.
WMG has a better Return On Equity (78.66%) than 97.22% of its industry peers.
WMG has a better Return On Invested Capital (11.44%) than 90.28% of its industry peers.
WMG had an Average Return On Invested Capital over the past 3 years of 12.68%. This is significantly below the industry average of 22.90%.
Industry RankSector Rank
ROA 4.66%
ROE 78.66%
ROIC 11.44%
ROA(3y)5.53%
ROA(5y)2.67%
ROE(3y)192.94%
ROE(5y)N/A
ROIC(3y)12.68%
ROIC(5y)N/A
WMG Yearly ROA, ROE, ROICWMG Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 200 400 600 800

1.3 Margins

With an excellent Profit Margin value of 7.04%, WMG belongs to the best of the industry, outperforming 81.94% of the companies in the same industry.
In the last couple of years the Profit Margin of WMG has grown nicely.
Looking at the Operating Margin, with a value of 13.47%, WMG belongs to the top of the industry, outperforming 81.94% of the companies in the same industry.
In the last couple of years the Operating Margin of WMG has grown nicely.
WMG has a Gross Margin (46.81%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of WMG has remained more or less at the same level.
Industry RankSector Rank
OM 13.47%
PM (TTM) 7.04%
GM 46.81%
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%
WMG Yearly Profit, Operating, Gross MarginsWMG Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 10 -10 20 30 40

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2

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WMG is still creating some value.
Compared to 1 year ago, WMG has more shares outstanding
Compared to 5 years ago, WMG has more shares outstanding
WMG has a better debt/assets ratio than last year.
WMG Yearly Shares OutstandingWMG Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100M 200M 300M 400M 500M
WMG Yearly Total Debt VS Total AssetsWMG Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B

2.2 Solvency

WMG has an Altman-Z score of 1.63. This is a bad value and indicates that WMG is not financially healthy and even has some risk of bankruptcy.
WMG has a Altman-Z score (1.63) which is comparable to the rest of the industry.
The Debt to FCF ratio of WMG is 8.02, which is on the high side as it means it would take WMG, 8.02 years of fcf income to pay off all of its debts.
WMG has a better Debt to FCF ratio (8.02) than 63.89% of its industry peers.
A Debt/Equity ratio of 7.57 is on the high side and indicates that WMG has dependencies on debt financing.
WMG's Debt to Equity ratio of 7.57 is on the low side compared to the rest of the industry. WMG is outperformed by 77.78% of its industry peers.
Industry RankSector Rank
Debt/Equity 7.57
Debt/FCF 8.02
Altman-Z 1.63
ROIC/WACC1.48
WACC7.73%
WMG Yearly LT Debt VS Equity VS FCFWMG Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 1B 2B 3B 4B

2.3 Liquidity

A Current Ratio of 0.66 indicates that WMG may have some problems paying its short term obligations.
WMG has a Current ratio of 0.66. This is in the lower half of the industry: WMG underperforms 69.44% of its industry peers.
A Quick Ratio of 0.64 indicates that WMG may have some problems paying its short term obligations.
The Quick ratio of WMG (0.64) is worse than 66.67% of its industry peers.
Industry RankSector Rank
Current Ratio 0.66
Quick Ratio 0.64
WMG Yearly Current Assets VS Current LiabilitesWMG Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B

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3

3. Growth

3.1 Past

WMG shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -28.68%.
Measured over the past years, WMG shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.64% on average per year.
The Revenue has decreased by -0.91% 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)-28.68%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-82.05%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-0.67%

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 11.49% on average per year.
WMG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.35% yearly.
EPS Next Y2.44%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
EPS Next 5Y11.49%
Revenue Next Year0.22%
Revenue Next 2Y2.91%
Revenue Next 3Y3.81%
Revenue Next 5Y4.35%

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.
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.
WMG Yearly Revenue VS EstimatesWMG Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2B 4B 6B
WMG Yearly EPS VS EstimatesWMG Yearly EPS VS EstimatesYearly EPS VS Estimates 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 0 0.5 -0.5 1 1.5

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4

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 31.95, which means the current valuation is very expensive for WMG.
Based on the Price/Earnings ratio, WMG is valued a bit cheaper than the industry average as 77.78% of the companies are valued more expensively.
WMG is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.45, which is the current average of the S&P500 Index.
WMG is valuated rather expensively with a Price/Forward Earnings ratio of 21.56.
Based on the Price/Forward Earnings ratio, WMG is valued a bit cheaper than the industry average as 77.78% of the companies are valued more expensively.
WMG's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.90.
Industry RankSector Rank
PE 31.95
Fwd PE 21.56
WMG Price Earnings VS Forward Price EarningsWMG Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

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 70.83% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 72.22% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 28.64
EV/EBITDA 15.92
WMG Per share dataWMG EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 5 -5 10

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WMG does not grow enough to justify the current Price/Earnings ratio.
WMG has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)13.08
PEG (5Y)3
EPS Next 2Y10.33%
EPS Next 3Y11.88%

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5

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 2.71%, WMG has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.64, WMG pays a better dividend. On top of this WMG pays more dividend than 91.67% of the companies listed in the same industry.
WMG's Dividend Yield is comparable with the S&P500 average which is at 2.42.
Industry RankSector Rank
Dividend Yield 2.71%

5.2 History

On average, the dividend of WMG grows each year by 30.53%, which is quite nice.
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
WMG Yearly Dividends per shareWMG Yearly Dividends per shareYearly Dividends per share 2020 2021 2022 2023 2024 2025 0.2 0.4 0.6

5.3 Sustainability

WMG pays out 83.41% of its income as dividend. 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.
DP83.41%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
WMG Yearly Income VS Free CF VS DividendWMG Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 200M -200M 400M -400M 600M 800M
WMG Dividend Payout.WMG Dividend Payout, showing the Payout Ratio.WMG Dividend Payout.PayoutRetained Earnings

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WARNER MUSIC GROUP CORP-CL A

NASDAQ:WMG (7/3/2025, 8:17:47 PM)

After market: 29.39 0 (0%)

29.39

+0.24 (+0.82%)

Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)05-08 2025-05-08/bmo
Earnings (Next)08-05 2025-08-05/amc
Inst Owners105.9%
Inst Owner Change4.29%
Ins Owners1.3%
Ins Owner Change7.36%
Market Cap15.32B
Analysts74.17
Price Target33.61 (14.36%)
Short Float %3.49%
Short Ratio3.28
Dividend
Industry RankSector Rank
Dividend Yield 2.71%
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP83.41%
Div Incr Years4
Div Non Decr Years4
Ex-Date05-27 2025-05-27 (0.18)
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-21.77%
Min EPS beat(2)-74.67%
Max EPS beat(2)31.13%
EPS beat(4)2
Avg EPS beat(4)-24.21%
Min EPS beat(4)-74.67%
Max EPS beat(4)31.13%
EPS beat(8)5
Avg EPS beat(8)-0.98%
EPS beat(12)7
Avg EPS beat(12)4.3%
EPS beat(16)8
Avg EPS beat(16)-1.53%
Revenue beat(2)0
Avg Revenue beat(2)-1.9%
Min Revenue beat(2)-3.26%
Max Revenue beat(2)-0.54%
Revenue beat(4)1
Avg Revenue beat(4)-1%
Min Revenue beat(4)-3.26%
Max Revenue beat(4)1.43%
Revenue beat(8)3
Avg Revenue beat(8)0.55%
Revenue beat(12)6
Avg Revenue beat(12)0.79%
Revenue beat(16)10
Avg Revenue beat(16)1.77%
PT rev (1m)-5.58%
PT rev (3m)-8.5%
EPS NQ rev (1m)4.72%
EPS NQ rev (3m)-9.03%
EPS NY rev (1m)-7.97%
EPS NY rev (3m)-19.48%
Revenue NQ rev (1m)0.19%
Revenue NQ rev (3m)-1.89%
Revenue NY rev (1m)-0.48%
Revenue NY rev (3m)-1.45%
Valuation
Industry RankSector Rank
PE 31.95
Fwd PE 21.56
P/S 2.42
P/FCF 28.64
P/OCF 17.16
P/B 27.02
P/tB N/A
EV/EBITDA 15.92
EPS(TTM)0.92
EY3.13%
EPS(NY)1.36
Fwd EY4.64%
FCF(TTM)1.03
FCFY3.49%
OCF(TTM)1.71
OCFY5.83%
SpS12.15
BVpS1.09
TBVpS-8.4
PEG (NY)13.08
PEG (5Y)3
Profitability
Industry RankSector Rank
ROA 4.66%
ROE 78.66%
ROCE 15.09%
ROIC 11.44%
ROICexc 12.89%
ROICexgc 937.18%
OM 13.47%
PM (TTM) 7.04%
GM 46.81%
FCFM 8.45%
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-Score4
Asset Turnover0.66
Health
Industry RankSector Rank
Debt/Equity 7.57
Debt/FCF 8.02
Debt/EBITDA 3.6
Cap/Depr 105.61%
Cap/Sales 5.65%
Interest Coverage 5.2
Cash Conversion 74.92%
Profit Quality 119.96%
Current Ratio 0.66
Quick Ratio 0.64
Altman-Z 1.63
F-Score4
WACC7.73%
ROIC/WACC1.48
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)-28.68%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-82.05%
EPS Next Y2.44%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
EPS Next 5Y11.49%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-0.67%
Revenue Next Year0.22%
Revenue Next 2Y2.91%
Revenue Next 3Y3.81%
Revenue Next 5Y4.35%
EBIT growth 1Y-8.96%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year35.85%
EBIT Next 3Y18.54%
EBIT Next 5Y13.81%
FCF growth 1Y-7.6%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y15.67%
OCF growth 3Y5.73%
OCF growth 5Y13.52%