WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
USA - NASDAQ:WMG - US9345502036 - Common Stock
33.81 USD
+0.6 (+1.81%)
33.81 USD
0 (0%)
Taking everything into account, WMG scores 4 out of 10 in our fundamental rating. WMG was compared to 80 industry peers in the Entertainment industry. WMG has an excellent profitability rating, but there are concerns on its financial health. WMG is not valued too expensively and it also shows a decent growth rate.
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.
WMG had positive earnings in 4 of the past 5 years.
WMG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
WMG's Return On Assets of 3.00% is fine compared to the rest of the industry. WMG outperforms 76.25% of its industry peers.
The Return On Equity of WMG (49.75%) is better than 97.50% of its industry peers.
WMG's Return On Invested Capital of 11.70% is amongst the best of the industry. WMG outperforms 88.75% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WMG is above the industry average of 9.25%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3% | ||
| ROE | 49.75% | ||
| ROIC | 11.7% |
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
With a decent Profit Margin value of 4.53%, WMG is doing good in the industry, outperforming 71.25% of the companies in the same industry.
In the last couple of years the Profit Margin of WMG has grown nicely.
WMG has a Operating Margin of 13.67%. This is amongst the best in the industry. WMG outperforms 82.50% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 46.64%, WMG perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
In the last couple of years the Gross Margin of WMG has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.67% | ||
| PM (TTM) | 4.53% | ||
| GM | 46.64% |
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.
The debt/assets ratio for WMG has been reduced compared to a year ago.
2.2 Solvency
WMG has an Altman-Z score of 1.73. This is a bad value and indicates that WMG is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 1.73, WMG perfoms like the industry average, outperforming 60.00% of the companies in the same industry.
WMG has a debt to FCF ratio of 11.16. This is a negative value and a sign of low solvency as WMG would need 11.16 years to pay back of all of its debts.
WMG has a Debt to FCF ratio (11.16) which is comparable to the rest of the industry.
A Debt/Equity ratio of 7.41 is on the high side and indicates that WMG has dependencies on debt financing.
WMG has a Debt to Equity ratio of 7.41. This is in the lower half of the industry: WMG underperforms 78.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Altman-Z | 1.73 |
ROIC/WACC1.51
WACC7.74%
2.3 Liquidity
WMG has a Current Ratio of 0.66. 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 has a Current ratio of 0.66. This is in the lower half of the industry: WMG underperforms 68.75% of its industry peers.
WMG has a Quick Ratio of 0.66. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.64, WMG is doing worse than 68.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
WMG shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -58.70%.
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 1.36% in the last year.
Measured over the past years, WMG shows a small growth in Revenue. The Revenue has been growing by 7.51% on average per year.
EPS 1Y (TTM)-58.7%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-109.37%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
3.2 Future
The Earnings Per Share is expected to grow by 11.84% on average over the next years. This is quite good.
The Revenue is expected to grow by 4.68% on average over the next years.
EPS Next Y-23.56%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
EPS Next 5Y11.84%
Revenue Next Year1.98%
Revenue Next 2Y3.79%
Revenue Next 3Y4.44%
Revenue Next 5Y4.68%
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
WMG is valuated quite expensively with a Price/Earnings ratio of 59.32.
WMG's Price/Earnings ratio is a bit cheaper when compared to the industry. WMG is cheaper than 72.50% of the companies in the same industry.
When comparing the Price/Earnings ratio of WMG to the average of the S&P500 Index (27.41), we can say WMG is valued expensively.
A Price/Forward Earnings ratio of 24.00 indicates a rather expensive valuation of WMG.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 80.00% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.88. WMG is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 59.32 | ||
| Fwd PE | 24 |
4.2 Price Multiples
WMG's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. WMG is cheaper than 67.50% of the companies in the same industry.
WMG's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. WMG is cheaper than 66.25% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.07 | ||
| EV/EBITDA | 17.07 |
4.3 Compensation for Growth
WMG has a very decent profitability rating, which may justify a higher PE ratio.
WMG's earnings are expected to grow with 14.22% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)5.57
EPS Next 2Y12.14%
EPS Next 3Y14.22%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.32%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 12.26, WMG pays a better dividend. On top of this WMG pays more dividend than 92.50% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, WMG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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
128.67% of the earnings are spent on dividend by WMG. This is not a sustainable payout ratio.
WMG's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP128.67%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
33.81
+0.6 (+1.81%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners106.33%
Inst Owner Change-4.63%
Ins Owners1.3%
Ins Owner Change2%
Market Cap17.62B
Analysts78.33
Price Target37.05 (9.58%)
Short Float %4.96%
Short Ratio3.54
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP128.67%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-92.79%
Min EPS beat(2)-110.91%
Max EPS beat(2)-74.67%
EPS beat(4)1
Avg EPS beat(4)-56.44%
Min EPS beat(4)-110.91%
Max EPS beat(4)31.13%
EPS beat(8)4
Avg EPS beat(8)-16.68%
EPS beat(12)6
Avg EPS beat(12)-6.88%
EPS beat(16)8
Avg EPS beat(16)-7.14%
Revenue beat(2)1
Avg Revenue beat(2)0.95%
Min Revenue beat(2)-3.26%
Max Revenue beat(2)5.17%
Revenue beat(4)2
Avg Revenue beat(4)0.7%
Min Revenue beat(4)-3.26%
Max Revenue beat(4)5.17%
Revenue beat(8)3
Avg Revenue beat(8)0.54%
Revenue beat(12)6
Avg Revenue beat(12)1.19%
Revenue beat(16)10
Avg Revenue beat(16)1.46%
PT rev (1m)7.51%
PT rev (3m)10.62%
EPS NQ rev (1m)0.66%
EPS NQ rev (3m)6.57%
EPS NY rev (1m)-24.46%
EPS NY rev (3m)-31.33%
Revenue NQ rev (1m)0.24%
Revenue NQ rev (3m)0.83%
Revenue NY rev (1m)1.81%
Revenue NY rev (3m)1.79%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 59.32 | ||
| Fwd PE | 24 | ||
| P/S | 2.72 | ||
| P/FCF | 45.07 | ||
| P/OCF | 23.47 | ||
| P/B | 29.92 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.07 |
EPS(TTM)0.57
EY1.69%
EPS(NY)1.41
Fwd EY4.17%
FCF(TTM)0.75
FCFY2.22%
OCF(TTM)1.44
OCFY4.26%
SpS12.41
BVpS1.13
TBVpS-8.43
PEG (NY)N/A
PEG (5Y)5.57
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3% | ||
| ROE | 49.75% | ||
| ROCE | 15.44% | ||
| ROIC | 11.7% | ||
| ROICexc | 12.89% | ||
| ROICexgc | 307.41% | ||
| OM | 13.67% | ||
| PM (TTM) | 4.53% | ||
| GM | 46.64% | ||
| FCFM | 6.04% |
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 Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Debt/EBITDA | 3.52 | ||
| Cap/Depr | 101.41% | ||
| Cap/Sales | 5.57% | ||
| Interest Coverage | 5.14 | ||
| Cash Conversion | 60.61% | ||
| Profit Quality | 133.45% | ||
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 | ||
| Altman-Z | 1.73 |
F-Score4
WACC7.74%
ROIC/WACC1.51
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)-58.7%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-109.37%
EPS Next Y-23.56%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
EPS Next 5Y11.84%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
Revenue Next Year1.98%
Revenue Next 2Y3.79%
Revenue Next 3Y4.44%
Revenue Next 5Y4.68%
EBIT growth 1Y-7.43%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year36.05%
EBIT Next 3Y18.71%
EBIT Next 5Y14.15%
FCF growth 1Y-30.43%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y-0.53%
OCF growth 3Y5.73%
OCF growth 5Y13.52%