WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
NASDAQ:WMG - Nasdaq - US9345502036 - Common Stock
Overall WMG gets a fundamental rating of 5 out of 10. We evaluated WMG against 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.
Of the past 5 years WMG 4 years were profitable.
Each year in the past 5 years WMG had a positive operating cash flow.
1.2 Ratios
WMG has a better Return On Assets (4.69%) than 80.30% of its industry peers.
The Return On Equity of WMG (82.82%) is better than 98.48% of its industry peers.
WMG's Return On Invested Capital of 13.96% is amongst the best of the industry. WMG outperforms 92.42% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WMG is significantly below the industry average of 94.12%.
The last Return On Invested Capital (13.96%) for WMG is above the 3 year average (12.68%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.69% | ||
| ROE | 82.82% | ||
| ROIC | 13.96% |
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
WMG's Profit Margin of 6.68% is amongst the best of the industry. WMG outperforms 80.30% of its industry peers.
In the last couple of years the Profit Margin of WMG has grown nicely.
The Operating Margin of WMG (15.06%) is better than 86.36% of its industry peers.
In the last couple of years the Operating Margin of WMG has grown nicely.
WMG has a Gross Margin (47.79%) 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 | 15.06% | ||
| PM (TTM) | 6.68% | ||
| GM | 47.79% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WMG is still creating some value.
WMG has more shares outstanding than it did 1 year ago.
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 1.77. 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 (1.77) which is in line with its industry peers.
The Debt to FCF ratio of WMG is 8.90, which is on the high side as it means it would take WMG, 8.90 years of fcf income to pay off all of its debts.
WMG's Debt to FCF ratio of 8.90 is fine compared to the rest of the industry. WMG outperforms 65.15% of its industry peers.
A Debt/Equity ratio of 7.75 is on the high side and indicates that WMG has dependencies on debt financing.
WMG has a worse Debt to Equity ratio (7.75) than 80.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.75 | ||
| Debt/FCF | 8.9 | ||
| Altman-Z | 1.77 |
ROIC/WACC1.73
WACC8.07%
2.3 Liquidity
WMG has a Current Ratio of 0.68. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
WMG's Current ratio of 0.68 is on the low side compared to the rest of the industry. WMG is outperformed by 69.70% of its industry peers.
WMG has a Quick Ratio of 0.68. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
WMG's Quick ratio of 0.65 is on the low side compared to the rest of the industry. WMG is outperformed by 69.70% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.68 | ||
| Quick Ratio | 0.65 |
3. Growth
3.1 Past
WMG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 30.23%, which is quite impressive.
The Earnings Per Share has been growing by 10.64% on average over the past years. This is quite good.
Looking at the last year, WMG shows a small growth in Revenue. The Revenue has grown by 6.44% in the last 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)30.23%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-76.47%
Revenue 1Y (TTM)6.44%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%2.77%
3.2 Future
WMG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.29% yearly.
Based on estimates for the next years, WMG will show a small growth in Revenue. The Revenue will grow by 5.38% on average per year.
EPS Next Y18.15%
EPS Next 2Y18.57%
EPS Next 3Y16.96%
EPS Next 5Y12.29%
Revenue Next Year3.13%
Revenue Next 2Y4.74%
Revenue Next 3Y5.43%
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.
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 26.80, which means the current valuation is very expensive for WMG.
Compared to the rest of the industry, the Price/Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 75.76% of the companies listed in the same industry.
WMG's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.29.
The Price/Forward Earnings ratio is 22.69, which indicates a rather expensive current valuation of WMG.
Based on the Price/Forward Earnings ratio, WMG is valued a bit cheaper than 75.76% of the companies in the same industry.
WMG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.8 | ||
| Fwd PE | 22.69 |
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 69.70% 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 71.21% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.48 | ||
| EV/EBITDA | 14.57 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of WMG may justify a higher PE ratio.
A more expensive valuation may be justified as WMG's earnings are expected to grow with 16.96% in the coming years.
PEG (NY)1.48
PEG (5Y)2.52
EPS Next 2Y18.57%
EPS Next 3Y16.96%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.40%.
Compared to an average industry Dividend Yield of 3.21, WMG pays a better dividend. On top of this WMG pays more dividend than 92.42% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.28, WMG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
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
5.3 Sustainability
84.15% 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.
DP84.15%
EPS Next 2Y18.57%
EPS Next 3Y16.96%
WARNER MUSIC GROUP CORP-CL A
NASDAQ:WMG (1/21/2025, 8:00:02 PM)
After market: 30.02 0 (0%)30.02
-0.22 (-0.73%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners103.2%
Inst Owner Change0.46%
Ins Owners2.02%
Ins Owner Change-3.54%
Market Cap15.55B
Analysts73.91
Price Target36.72 (22.32%)
Short Float %4.51%
Short Ratio3.69
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP84.15%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-26.64%
Min EPS beat(2)-71.28%
Max EPS beat(2)18%
EPS beat(4)2
Avg EPS beat(4)-3%
Min EPS beat(4)-71.28%
Max EPS beat(4)65.85%
EPS beat(8)4
Avg EPS beat(8)-5.47%
EPS beat(12)7
Avg EPS beat(12)8.9%
EPS beat(16)8
Avg EPS beat(16)3.65%
Revenue beat(2)1
Avg Revenue beat(2)-0.11%
Min Revenue beat(2)-1.65%
Max Revenue beat(2)1.43%
Revenue beat(4)2
Avg Revenue beat(4)0.79%
Min Revenue beat(4)-1.65%
Max Revenue beat(4)3.49%
Revenue beat(8)4
Avg Revenue beat(8)0.96%
Revenue beat(12)8
Avg Revenue beat(12)1.72%
Revenue beat(16)12
Avg Revenue beat(16)2.63%
PT rev (1m)0.47%
PT rev (3m)0.33%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-15.67%
EPS NY rev (1m)0%
EPS NY rev (3m)-7.73%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-4.64%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.8 | ||
| Fwd PE | 22.69 | ||
| P/S | 2.42 | ||
| P/FCF | 34.48 | ||
| P/OCF | 20.62 | ||
| P/B | 30.02 | ||
| P/tB | N/A | ||
| EV/EBITDA | 14.57 |
EPS(TTM)1.12
EY3.73%
EPS(NY)1.32
Fwd EY4.41%
FCF(TTM)0.87
FCFY2.9%
OCF(TTM)1.46
OCFY4.85%
SpS12.41
BVpS1
TBVpS-7.75
PEG (NY)1.48
PEG (5Y)2.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.69% | ||
| ROE | 82.82% | ||
| ROCE | 18.41% | ||
| ROIC | 13.96% | ||
| ROICexc | 16.08% | ||
| ROICexgc | 2293.24% | ||
| OM | 15.06% | ||
| PM (TTM) | 6.68% | ||
| GM | 47.79% | ||
| FCFM | 7.02% |
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 Turnover0.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.75 | ||
| Debt/FCF | 8.9 | ||
| Debt/EBITDA | 3.1 | ||
| Cap/Depr | 92.66% | ||
| Cap/Sales | 4.72% | ||
| Interest Coverage | 5.29 | ||
| Cash Conversion | 58.22% | ||
| Profit Quality | 105.13% | ||
| Current Ratio | 0.68 | ||
| Quick Ratio | 0.65 | ||
| Altman-Z | 1.77 |
F-Score5
WACC8.07%
ROIC/WACC1.73
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)30.23%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-76.47%
EPS Next Y18.15%
EPS Next 2Y18.57%
EPS Next 3Y16.96%
EPS Next 5Y12.29%
Revenue 1Y (TTM)6.44%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%2.77%
Revenue Next Year3.13%
Revenue Next 2Y4.74%
Revenue Next 3Y5.43%
Revenue Next 5Y5.38%
EBIT growth 1Y22.69%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year49.57%
EBIT Next 3Y21.62%
EBIT Next 5Y14.92%
FCF growth 1Y1.12%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y9.75%
OCF growth 3Y5.73%
OCF growth 5Y13.52%